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[Solution Library] The figure below illustrates a firm's isoquants and isocost lines. The cost of labor (w) is $10 per unit and the cost of capital (r) is

Question: The figure below illustrates a firm's isoquants and isocost lines. The cost of labor (w) is $10 per unit and the cost of capital (r) is $40 per unit.

  1. What is the equation of the firm's isocost line at Q = 40?
  2. What is the MRTS for Q=40 at the tangency with the isocost line?
  3. At the same point, if the marginal product of labor (MPS,) is 1, what is the marginal product of capital (WO?
  4. In the figure above, graph the expansion path.
  5. In the table below, calculate and report total cost (TC).

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