How much K and L should the producer hire? The answer is that our choice must exist somewhere on this isoquant. If each possible choice must lie on this isoquant, then our basis for choosing one "best" combination should be to choose the least cost combination. Let’s experiment with some different possibilities, by plugging values for L and K into the isocost equation above. Each combination should yield output of 1000 units. Several combinations, and their specific total cost are given as follows:
__________________
||||||||||||||||||||50% Complete
|