Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please explain why the gradient of the isocost line is different to the gradient of the isoquant? and also why are there three isoquant drawn?and

Please explain why the gradient of the isocost line is different to the gradient of the isoquant? and also why are there three isoquant drawn?and how do ink show to draw it, please explain this step by step, thanks!

image text in transcribedimage text in transcribed
K Q1 102 03 LJustin owns a lot of small urban parking lots and has a choice of either hiring an attendant or buying a parking machine for each lot. He nds that no matter how many cars use his parking lots or how the prices of machines or wages of attendants vary. he always minimizes his costs by buying only one or the other of the two. Draw Justin's isoquant map. ANSWER: If K (parking machines) and L (attendants) are perfect substitutes, only one of the inputs will be used for any given isocost line. No matter what the isocost line '3 slope, we will always get a corner solution (except where the slope is exactly the same as the slope of the isoquant). In the graph below solid lines are isoquants and the dashed line is an isocost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Commanding Heights The Battle For The World Economy

Authors: Daniel Yergin, Joseph Stanislaw

1st Edition

068483569X, 9780684835693

More Books

Students also viewed these Economics questions