Question 1
Refer to the information provided in Figure 7.8 below to answer the question(s) that follow.
Refer to Figure 7.8 The firmʹs isocost line could shift from
CE to
CD if
◦ the price of capital increased.
◦ the firmʹs total expenditures decreased by 33%.
◦ the price of labor increased by 33%.
◦ the firmʹs total expenditures decreased by 33% or the price of capital and labor each increased by 50%.
Question 2
Refer to the information provided in Figure 7.8 below to answer the question(s) that follow.
Refer to Figure 7.8. The firm is currently along isocost
CE. If the price of labor is $60, then the price of labor is
◦ $40.
◦ $60.
◦ $80.
◦ $90.
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