You decide to increase your daily output of yards mowed from 4 to 6. How much labor will you use and what will total costs be? Illustrate with another isocost line in your diagram and label the input combination (b). C) K is still fixed at K=4, but now you decide to reduce output to two yards per day. What input combination will you use? What will total costs be? D) Graph the three above points on your SRATC curve when K is fixed at K=4. Label the three points that correspond to (a), (b), and (c). E) Suppose that you are planning on expanding your business. If both capital and labor are variable, what is the average cost of producing Q=6? Q=8?
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