One way to explain the convexity of isoquants is to say that
A) as labor increases and capital decreases, MPL rises while MPK falls.
B) as labor increases and capital decreases, MPL falls while MPK rises.
C) as labor increases and capital decreases, MPL and MPK both fall.
D) as labor increases and capital decreases, MPL and MPK both rise.

Question

Quizplus · Accepted Answer

Isoquants are convex because as we move down and to the right along an isoquant (increasing the quantity of labor and decreasing the quantity of capital), the marginal product of labor (MPL) declines while the marginal product of capital (MPK) increases. This occurs because as we add more labor, the diminishing returns to labor result in a smaller MPL, while the increasing returns to capital result in a greater MPK. The combination of these two effects leads to the convex shape of isoquants.

One Way to Explain the Convexity of Isoquants Is to Say