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CHAPTER 7 APPENDIX
1A.1 MPL / PL = 10 / 4 = 2.5 <MPK / PK = 6 / 2 = 3. The MP per dollar spent on capital is higher
1A.2 At A,
MP MP P P
L K L K
because the slope of the isoquant is greater than the slope of the isocost.
1A.3 Q TC L K
1A.4
1A.5
Blue Bomber’s isocost
Units of labor (L)
Units of capital (K)
Blue Bomber’s cost-minimizing combina"on
Red Racer’s cost-minimizing combina"on
KBlue Bomber
0LRed RacerLBlue Bomber
