Ready to test your Knowledge?
Try out our new practice tests completely free!
exam preparation banner icon
Solved

Consider a Firm That Uses Two Inputs, Labor and Capital

arrowarrow
Question 301
Multiple Choice
arrowQuestion 301arrow
Multiple Choice

Consider a firm that uses two inputs, labor and capital, to produce its output.Assume labor is measured on the horizontal axis and capital on the vertical axis.Which of the following best explains why the marginal rate of technical substitution decreases in absolute value as we move down an isoquant?


A)The law of diminishing returns: for a given decline in capital, decreasing amounts of labor are required to produce the same level of output.
B)The law of increasing marginal opportunity cost: if a firm uses less and less capital it must use more and more labor, which drives up the cost of labor.
C)The law of diminishing returns: for a given decline in capital, increasing amounts of labor are required to produce the same level of output.
D)The law of imperfect substitutability: labor and capital are not perfect substitutes; therefore, a firm must replace decreases in capital with increases in labor.

Choose question tag
close menu

10+ million students use Quizplus to study and prepare for their homework, quizzes and exams through 20m+ questions in 300k quizzes.

Business

Explore our library and get Economics Homework Help with various study sets and a huge amount of quizzes and questions

Get Free Access Now!
Textbook Solutions
Textbook Solutions

Find all the solutions to your textbooks, reveal answers you would’t find elsewhere

Find Solutions
Search By Image
Search By Image

Scan any paper and upload it to find exam solutions and many more

Flashcards
Flashcards

Studying is made a lot easier and more fun with our online flashcards

Find Flashcards