The perfect substitution of two inputs implies that
A)two inputs can be substituted at a ratio of 1 to 1.
B)one input can be substituted for another up to some point.
C)two inputs can be substituted at some constant ratio.
D)one input can be substituted for another.

Question

Quizplus · Accepted Answer

The perfect substitution of two inputs implies that they can be substituted at a constant ratio, meaning that the amount of one input that can be replaced with another is always the same. This is different from partial substitution (option B) where there are diminishing returns to substitution as more of one input is used in place of another. Option A is too specific and option D is too broad.

The Perfect Substitution of Two Inputs Implies That