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Suppose that initially w=10, r=20 and your budget as the manager of a firm is C=100. Then a few changes occur: the price of capital
Suppose that initially w=10, r=20 and your budget as the manager of a firm is C=100. Then a few changes occur: the price of capital falls by 50%, there's a "buy-one-get-one free" promotion on capital, and you get 3 free units of capital. If you were drawing the isocost for this example after all these changes (which occur simultaneously), what would be the maximum amount of capital you would be able to purchase if you spent all your money on capital
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