19- The firm's marginal rate of technical substitution is diminishing. 18 17 16 15 14 A firm finds that it can always trade five units of labor for one unit of capital and still keep output constant. Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label this line 'Isoquant'. 13 12 11 10- Carefully follow the instructions, and only draw the required objects. 9. 8. 7- 6- 3. 10 12 14 16 18 20 Labor Capital

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.7P
icon
Related questions
Question
20-
The firm's marginal rate of technical substitution is diminishing.
19-
18-
A firm finds that it can always trade five units of labor for one unit of capital and still keep output
17-
16-
15-
constant.
14-
Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label
this line 'Isoquant'.
13-
12-
11-
Carefully follow the instructions, and only draw the required objects.
10-
9-
8-
7-
6-
5-
4-
3-
2-
1
0+
2
6.
8
10
12
14
16
18
20
Labor
Capital
Transcribed Image Text:20- The firm's marginal rate of technical substitution is diminishing. 19- 18- A firm finds that it can always trade five units of labor for one unit of capital and still keep output 17- 16- 15- constant. 14- Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label this line 'Isoquant'. 13- 12- 11- Carefully follow the instructions, and only draw the required objects. 10- 9- 8- 7- 6- 5- 4- 3- 2- 1 0+ 2 6. 8 10 12 14 16 18 20 Labor Capital
Expert Solution
Step 1

A firm finds that it can always trade five units of labor for one unit of capital and still keep output constant. 

It implies the marginal rate of technical substitution (MRTS) of labor for capital is constant and equal to 1/5. 

MRTS is a slope of isoquant.

MRTS is constant, it means the isoquant curve is linear. 

 

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Costs
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,