Which one of the following concepts measures the amount of capital that the firm can gwe up by using…
The Marginal Rate of Technical Substitution of labor for capital (MRTS_LK)—which diminishes along a convex isoquant—measures the amount of capital that a firm can give up…
Choose your answer
Which one of the following concepts measures the amount of capital that the firm can gwe up by using one additional unit of labour and still remain on the same isoquant?
Answer and explanation
Correct answer C
The Marginal Rate of Technical Substitution of labor for capital (MRTS_LK)—which diminishes along a convex isoquant—measures the amount of capital that a firm can give up when employing one additional unit of labor while remaining on the exact same isoquant (maintaining constant output).
Practice for these exams
-
UGC NET Commerce