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In: Economics

Two companies, X and Y, are competitors in the same industry, but company X is more...

Two companies, X and Y, are competitors in the same industry, but company X is more efficient at using its resources than company Y.

a.         If the MRTS is the same in the production processes of both companies, show and discuss how the isoquants will be different for company X than they are for company Y.

b.         Both companies can hire labor at the same wage, w, but company X is able to pay a lower rent per unit on its capital. Show and discuss how these company’s relative uses of labor and capital will be different from one another and why.

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Rahul Sunny answered 1 year ago
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