Distinguish between returns to scale and returns to a factor
Managerial Economics
1. Distinguish between returns to scale and returns to a factor.
2. Your company currently uses steel and aluminum in a production process. Steel costs $.50 per pound, and aluminum costs $1.00 per pound. Suppose the government imposes a tax of $.25 per pound on all metals. What affect will this have on your optimal input mix? Show using isoquants and isocost lines.
