Use the Following Graph to Answer the Following Questions

question 20

Essay

Use the following graph to answer the following questions. a.If the wage rate and the rental price of machines are both $50 and total cost is $800,is the cost-minimizing point A,B,or C?
b.If the wage rate is $40,the rental price of equipment is $120,and total cost is $1,200,is the cost-minimizing point A,B,or C?
c.If the wage rate is $60,the rental price of equipment is $90,and total cost is $1,800,is the cost-minimizing point A,B,or C?

---

Definitions:

Normal Goods

Goods for which demand increases as the income of consumers increases.

GDP

Gross Domestic Product refers to the sum total of all monetary values of final goods and services produced within the geographical confines of a country during a given time frame.

Income Effect

The change in an individual’s or economy’s income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with less expensive ones.