Homework Answers
A. MRTS =MPL/MPK=( 0.8L^-0.2 K^0.2)/(0.2 K^-0.8 L^0.8)= 4K/L
B. MRTS= 4K/L
When L rises, MRTS Falls if K is constant
Suppose K= 4
If L= 8, MRTS= 4*4/8= 2
If L= 10, MRTS= 4*4/10= 1.6
C. K=3, L=2
MRTS= 4*3/2= 6
It means to maintain the same level of output, if labor increases by 1 unit, capital must fall by 6 units.
Note-According to HOMEWORKLIB RULES first question is answered
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