If a firm's production function is Leontief and the wage rate goes up, the: Multiple Cholce firm must use more capital in order to minimize the cost of producing a given level of output. firm must use more labor in order to minimize the cost of producing a given level of output.

If a firm's production function is Leontief and the wage rate goes up, the: Multiple Cholce firm must use more capital in order to minimize the cost of producing a given level of output. firm must use more labor in order to minimize the cost of producing a given level of output.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

If a firm's production function is Leontief and the wage rate goes up, the:
Multiple Choice
firm must use more capital in order to minimize the cost of producing a given level of
output.
firm must use more labor in order to minimize the cost of producing a given level of
output.
firm must use less labor in order to minimize the cost of producing a given level of
output.
cost minimizing combination of capital and labor does not change.

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