Monday
December 22, 2014

Homework Help: Expansion Path Economics

Posted by Ed on Saturday, July 14, 2007 at 6:36pm.

I've been trying to find a solution to this without much success.

I am given the following....The production engineers at Impact Industries have derived the expansion path shown in the following figure. The price of labor is $100 per unit.

There is a graph showing the expansion path and three curves at 120, 180, 240 output levels.The expansion path hits these lines at(120) 20 (C)(capital units) 4(L)(Labor units, (180) 40 (C) 6(L), (240) 50(C) 8(L). There are three straight lines in faded gray that run with these curves...(120) 40(C) to 8(L), (180) 60(C) to 12(L), (240) 90 (C) to 18 (L)...I hope this helps recreate the graph? Capital runs by 10's to 100 on the left-vertically and Labor runs by 2's to 20 horizontally

The first question asks me what price does Impact Imdustries pay for capital. In the text capital and labor units are always given, I can find no formula for determining capital...
Can some one help?!?!?!?!? I'm frustrated!

Thanks,
EY

see my response to your July 15 posting.

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