Problem 2 Look at the isocost lines in the following figure. Both of these technologies can be used to produce 100 meters of cloth. Based on this information, what can we conclude? 10 G A Tonnes of coal Cost = E50 NWA UA B Cost = 180 Cost = $40 F M H 1 2 3 4 5 6 7 8 9 10 Number of workers a. Determine the wage and cost of coal per tonne for each isocost curve: i. Isocost Curves NM and GF ii. Isocost Curve JH b. Assuming constant wages, what conditions are necessary for a firm to switch from Technology A to Technology B? c. Determine whether the following statements are true or false: i. When the wage is f10 and the price of coal is f5, the combination of inputs at point N is more costly than the inputs at point B. ii. Isocosts NM and GF represent the same price ratio (wage/price of coal) but different total costs of production. iii. Isocost JH represents a higher (wage/price of coal) ratio than isocost GF. iv . JH represents all points that can produce 100 meters of cloth at a particular price ratio