A firm can obtain one of its factors of production from either of two.docx

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A firm can obtain one of its factors of production from either of two sources: locally or from a neighbouring region. The price and quality of each input is identical, and there is no transportation costs. Each region levies its own value-added tax. The tax rates are presently the same, but the local government is considering increasing its rate. Use an isocost-isoquant diagram to explain how the firm might respond. .

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