What is the marginal technical rate of substitution?
What will be an ideal response?
The marginal rate of technical substitution is the slope of the isoquant. It is the ratio of the marginal product of labor to the marginal product of capital. It is the negative of the slope of the isoquant.
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Use the following graphs to answer the next question.
In the diagrams above, AD1 and AS1 represent the initial state of an economy. If full-employment output is at Q2, which diagram represents the adjustment back to full employment output in the absence of government intervention? ________.
A. panel (A) only B. panel (B) only C. panel (C) only D. panels (B) and (C)
The government sets up a lighthouse to prevent ships from crashing into rocks near the shore. The lighthouse is an example of a _____
a. merit good b. club good c. public good d. private good
Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves indicate that
A. The United States does not have an absolute advantage in the production of either good. B. Mexico has an absolute advantage in the production of machinery. C. The United States has an absolute advantage in the production of both goods. D. The United States has a comparative advantage in the production of machinery.
For movements along the long-run aggregate supply curve...
What will be an ideal response?