With its current levels of input use, a firmʹs Marginal Rate of Technical Substitution is 5 (when capital is on the vertical axis and labour is on the horizontal axis). This implies A. the firm could produce 5 more units of output if it increased its use of capital by one unit (holding labour constant). B. the marginal product of labour is 5 times the marginal product of capital. C. the marginal product of labour is 1/5 times the marginal product of capital. D. if it used one more unit of both capital and labour, the firm could produce 5 more units of output.

With its current levels of input use, a firmʹs Marginal Rate of Technical Substitution is 5 (when capital is on the vertical axis and labour is on the horizontal axis). This implies A. the firm could produce 5 more units of output if it increased its use of capital by one unit (holding labour constant). B. the marginal product of labour is 5 times the marginal product of capital. C. the marginal product of labour is 1/5 times the marginal product of capital. D. if it used one more unit of both capital and labour, the firm could produce 5 more units of output.

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

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