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Suppose that the government subsidizes the cost of workers by paying for 25% of the wage. Show how this subsidy will impact the firm's cost-minimizing
Suppose that the government subsidizes the cost of workers by paying for 25% of the wage. Show how this subsidy will impact the firm's cost-minimizing choice of labor and capital inputs.
What would happen if both capital and labor are subsidized at 25% instead? Explain your answers using isoquants and isocost curves.
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