If the price of one factor increases, then the firm will find a new least-cost factor combination by shifting its lowest equal-cost line along its same equal-product curve.

Question

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When the price of one factor increases, the firm will seek a new least-cost combination of factors, which typically involves moving to a different equal-product curve that reflects a new combination of inputs, not merely shifting along the same equal-product curve. This adjustment is made to minimize costs while maintaining the same level of output, if possible, but it involves changing the combination of inputs used.

If the Price of One Factor Increases, Then the Firm