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Use an annotated/labeled isoquant diagram to demonstrate your discussion of the following. In the SR, firms are most likely to have too low a K:L
Use an annotated/labeled isoquant diagram to demonstrate your discussion of the following. In the SR, firms are most likely to have too low a K:L ratio and therefore the firm is not optimally cost-minimizing. (a) How would you know how much the firm can economize by (eventually) readjusting K:L? (b) How would you know the firm's output opportunity cost from failing to make the adjustment?
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