a. Under autarky (in absence of trade), a unit cost of labor (w) is $40 and a unit cost of capital (r) is $20 in the U.S. Draw the minimum-total-cost isocost line to produce 100 units of vaccines and label it as "(w/r)us" on the isoquant diagram of vaccines, attached to this instruction sheet. Indicate an optimal point on your diagram and label it as "US". At the optimal point, how many units of labor and capital will be used?
a. Under autarky (in absence of trade), a unit cost of labor (w) is $40 and a unit cost of capital (r) is $20 in the U.S. Draw the minimum-total-cost isocost line to produce 100 units of vaccines and label it as "(w/r)us" on the isoquant diagram of vaccines, attached to this instruction sheet. Indicate an optimal point on your diagram and label it as "US". At the optimal point, how many units of labor and capital will be used?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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a. Under autarky (in absence of trade), a unit cost of labor (w) is $40 and a unit cost of capital (r) is $20 in the U.S.
Draw the minimum-total-cost isocost line to produce 100 units of vaccines and label it as "(w/r)us" on the isoquant diagram of vaccines, attached to this instruction sheet. Indicate an optimal point on your diagram and label it as "US". At the optimal point, how many units of labor and capital will be used?
Transcribed Image Text:Iso-quant of Production of Vaccines
Сapital
140
120
100
80
60
Isoquant of Producing
100 units of Vaccines
40
20
40
60
80
100
120
140 Labor
20
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