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We can produce widgets with two inputs - labour and capital. The two inputs are perfect substitutes. Current technology methods allow one machine to do

We can produce widgets with two inputs - labour and capital. The two inputs are perfect substitutes. Current technology methods allow one machine to do the work of three labourers. The widget factory wishes to produce one hundred units of output. The price of capital is $750 per machine per week. What combination of inputs will the firm use if the weekly salary of each worker is $300? What combination of inputs will the firm use if the weekly salary of each worker is $225? Draw isocost line to help structure your thinking.

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