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5. Input Inflexlbility and cost minimization The following lsoquants depict the technologically efficient bundles of labor and capital for producing 100 and units of output

5. Input inflexibility and cost minimization Aa Aa The following isoquants depict the technologically efficient bundles of labor and capital for producing 100 and 150 units of output (labeled q 100, and q150, respectively). Suppose the firm is initially using the cost-minimizing bundle of labor and capital for producing 100 units of output, represented by point A. CAPITAL 50 45 40 35 30 25 20 15 10 Expansion Path 150 q-100 0 10 20 30 40 50 60 70 80 90 100 LABOR HelpClear All Assume that the expansion path is a straight line in this case. Use the blue line (circle symbols) to show the expansion path for this firm on the graph.

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