You are a department manager in a large software firm, and you have an assignment to produce a customized database for a client in the next wee Your boss asks you to find the least costly way to produce the database. In order to produce the database, you'll need to use computers and programmers. The production indifference curve on the following graph shows combinations of computers and programmers that you can use to create the database in a week. 0 -+ 9 Production Indifference Curve s L $600 Budget Line w g7 1 A 3 8 6 -+ Cost-min budget line s g st -+ % 4 T Least Cost Combination 4 4+ Production Indifference Curve (Q = 400) = A = CESL 3+ Production Indifference Curve (Q = 600) 5 & c 2 22 | I 5 1 -+ 0 -+ + + + + + + + + + i 0 10 20 30 40 50 60 70 80 S0 100 LABOR (Hours of labor) isume that the price of labor is $25 per hour, and the price of capital is $250 per unit. Given these input prices, the least expensive way to produce )0 units of output is to use W of capital and % hours of labor. 1ppose the firm's production indifference curve corresponding to an output of 200 units can be approximated by the smooth curve, labeled "Q=200," | the following graph. Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. @ 5 e - 4 Least Cost Combination . A = 'a . . 5 3 4 Cost-min budget line s &8 = = 2 = 5 1 Q=200 0 + + + + + + t b b b 0 10 20 30 40 50 60 70 80 g0 100 LABOR (Hours of labor) Suppose a firm has two inputs: capital and labor. The following table shows how much labor the firm needs to produce 200, 400, or 600 units of output if it has 1, 2, 3, or 4 units of capital: Labor Input (Hours) Quantity Produced With 1 Unit of Capital With 2 Units of Capital With 3 Units of Capital With 4 Units of Capital 200 60 30 10 5 400 90 50 35 25 600 100 65 45 30 On the following diagram, plot this firm's production indifference curves for 400 and 600 units of output. Specifically, use the purple points (diamor symbol) to plot the production indifference curve corresponding to 400 units of output; use the green points (triangle symbol) to plot the productio indifference curve corresponding to 600 units of output. > 4 Production Indifference Curve (Q = 400) = A z 3 3+ Production Indifference Curve (Q = 600) 5 & c 2 T 2 1 i 5 1 - 0 + } } } } } } } } } | LABOR (Hours of labor) sume that the price of labor is $25 per hour, and the price of capital is $250 per unit. Given these input prices, the least expensive way to produ 10 units of output is to use W of capital and % hours of labor. ippose the firm's production indifference curve corresponding to an output of 200 units can be approximated by the smooth curve, labeled Q=2 | the following araph. Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. 5 e - 4 Least Cost Combination . o = 'a . . 8 3 4 Cost-min budget line s &8 = 2 2 = 3 1 Q=200 0 + + + + + + t b b b 0 10 20 30 40 50 60 70 80 90 100 LABOR (Hours of labor)