Noah B. owns a firm that produces 'hot tamale' candy. Because this is a complicated process (in spite of which, the candy still tastes like crap), the firm needs a minimum number of workers, Ñ, to produce. That is, the firm produces no output unless the labor input is greater than or equal to some threshold value, Ñ. Otherwise, the firm produces output according to the typical production function, Y = 2F(K, N). 1. Derive the production function for Noah B.'s firm. Graph 2. Determine the optimization point N° for the firm. Explain how N° depends on the real wage, w, and determine the value of real wage, w, such that N*>0

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Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.