Question

7. Production can be described by Q(L,K) = LK + L. The marginal product of labor as the firm uses more L, holding K constant. The marginal rate of technical substitution of L for K __ as the firm moves from left to right along an isoquant. a. decreases; decreases b. decreases; increases c. decreases; remains constant d. increases; decreases e. increases; increases f. increases; remains constant g. remains constant; decreases h. remains constant; increases i. remains constant; remains constant

Answer 1

Answer

Option g

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MPL=partial differentiation of production funtion with respect to labor

=dQ/dL=K+1

the K is contant and 1 is also constant so the MPL remain cosntant

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MRTS=MPL/MPK

MPK=dQ/dK=L

MRTS=(K+1)/L

from left to right the labor increases as the labor is on the horizontal axis so the MRTS decreases as L increases.

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