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Expansion paths and isoquants

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"The best expansion path for a firm contemplating growth is along the points of tangency between the firm's isoquant and isocost lines."

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Solution Summary

How growth relates to isoquant and isocost lines

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If a firm wishes to maximize profits, this is the best path for its expansion. Each isocost line gives us combinations of inputs that coincide with the firm's budget. Each isoquant tells us how much ...

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