A firm uses two inputs, labour and capital, to produce an
output x using a homothetic production technology. At the current
market wage w, rental rate of capital r and output price p, the
firm has identified A = (xA, ℓA, kA) as its profit-maximising
production plan. In a diagram, with labour on the horizontal axis
and capital on the vertical axis, use an isoquant and isocost
diagram to illustrate this production plan and the set of all
cost-minimising input...