Iso-cost lines Slopes =-w,/w2 c≡W11+W2X2 c≡W1X1+W2X2 c<C X1
Iso-cost Lines c’ º w1x1+w2x2 c” º w1x1+w2x2 c’ < c” x1 x2 Slopes = -w1 /w2
The y'-Output Unit Isoquant All input bundles yielding y' units of output. Which is the cheapest? f(x1x2)≡y X1
The y’-Output Unit Isoquant x1 x2 All input bundles yielding y’ units of output. Which is the cheapest? f(x1 ,x2 ) º y’
The cost-Minimization problem All input bundles yielding y' units of output. Which is the cheapest? f(x1x2)≡y X1
The Cost-Minimization Problem x1 x2 All input bundles yielding y’ units of output. Which is the cheapest? f(x1 ,x2 ) º y’
The cost-Minimization problem All input bundles yielding y' units of output. Which is the cheapest? f(x1x2)≡y X1 X1
The Cost-Minimization Problem x1 x2 All input bundles yielding y’ units of output. Which is the cheapest? f(x1 ,x2 ) º y’ x1 * x2 *
The cost-Minimization problem At an interior cost-min input bundle 2(a)f(x,X2)=y f(x1x2)≡y X1 X1
The Cost-Minimization Problem x1 x2 f(x1 ,x2 ) º y’ x1 * x2 * At an interior cost-min input bundle: (a) f (x ,x ) y * * 1 2