a. "Isoquant and Isocost curves are the key concerns in theory of production with 2 variable inputs. The Isoquants Curve shows all possible combinations of inputs that yield the same output, and it can take different shapes such as covex, linear or L shaped".
Discuss the implication of these shapes with reference to the nature of production function and the associated Marginal Rate of Technical Substitution (MRTS)
b. Feng Li was a newly graduated software engineer in Melbourne based company who earns salary of $60,000. Before Covid 19 pandemic he decided to quit his job with the hope of starting his own business in a building he owns and was previously renting out for $30,000 per year.
Due to Covid pandemic, he could not reach his expected level of success and following expenses were reported during the first year of his business.
Employee salary - 100,000 (50% of this is his own salary)
Rent - $ 0
Miscellaneous expenses - $35,000
Distinguish accounting cost from economic cost and calculate the accounting an economic cost associated with Feng Li's new business.