Suppose that, at a given production plan, the marginal product of labor is 6 and the marginal product of capital is 3. In a graph with labor on the horizontal and capital on the vertical axis, this implies that the technical rate of substitution at that production plan is
A. -1/2
B. -2
C. -18
D. None of the above
Answer: B
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The De Beers Company blocked competition
A) by controlling the supply of most of the world's high-quality bauxite, the mineral used to produce aluminum. B) in the diamond market by controlling the output of most of the world's diamond mines. C) in the market for fresh and frozen cranberries because it controls about 80 percent of the cranberry crop. D) because it has lower production costs than other department stores due to economies of scale.
Most migrants move from developing to developed nations
Indicate whether the statement is true or false
A firm is operating with an optimal combination of inputs. Suddenly the price of one input rises. The firm should
a. buy less of that input and more of the other input. b. change its input mix so that the marginal physical product of the input whose price has risen falls and the marginal physical product of the other input rises. c. buy less of whichever input now has the highest money price and more of the other input. d. reduce its output.
Figure 10.3 describes the labor market for a manufacturing industry. In the short run, an increase in the productivity of the workers will:
A. cause the equilibrium wage and the hours of labor used to increase. B. not have an effect on this market. C. cause the equilibrium wage to increase but will not change the hours of labor used. D. cause the equilibrium wage to increase and the hours of labor used to decrease.