Information for questions 5-7 The following figure shows thr…
Information for questions 5-7 The following figure shows three isoquants for a firm that produces candy, with units of labor on the horizontal axis, and units of capital on the vertical axis. Each isoquant is labeled with the output of candy that its combinations of labor and capital produce. Note that each grid spacing is 0.25 on both axes. Also shown are some auxiliary lines in solid black. The steepest line has slope = 2, and the three flattest lines all have slope = 1 (all of these slopes are in absolute value). Note that each of the auxiliary lines is tangent to an isoquant, and that its tangency point is marked with a dot. Suppose that the wage is w=50 and the rental rate is r=25. How much is the minimum cost of producing 15 units? Only the exact answer is accepted. For that purpose, adopt the convention: if a line seems to cross a grid point, assume that it does so exactly. For example, the Q=20 isoquant passes through point (L=1, K=4), exactly.