Assume a firm can produce according to the production function: 𝑞 = 𝑓(𝐿, 𝐾) = 𝐿 + 3𝐾
- Assume the wage, the cost of labor, is 6, and rent the cost of capital, is 12. What is the best combination of labor and capital to produce 12 units with?
- Illustrate your answer to part a with an isoquant/isocost drawing.
- If the wage decreased to $2, would this change how the firm will produce? If so, how?