For Figure 6.9 in the book, MRTS = K/(4L) with capital (K) on the vertical axis of the isoquant map. Suppose L=100 hours and K=400 machine hours at the current level of output. How much additional labor is required to maintain output if we reduce capital by one machine hour?
A) One hour
B) Two hours
C) Three hours
D) Four hours

Question

Quizplus · Accepted Answer

MRTS = K/(4L) = 400/(4*100) = 1If we reduce capital by one machine hour, we need to increase labor by 1/MRTS = 1 hour to maintain output.