Method B however allows the firm to reach the same isoquant as the other two methods but is on a much lower isocost line, meaning that it is a cheaper way to produce the same output.

    A profit maximizing firm will choose the cheapest way to produce a given level of output which means that it will use the capital/labor mix which allows it to reach the lowest isocost line which still reaches the isoquant. For the firm shown to the right that is method B using L1 workers and K1 units of captial

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