Question

The slope of the tangent line at A is very steep at A compared with B because since there is not much labour at A but a lot of capital, labour has a high marginal product while capital has a low marginal product such that if labour is increased by a small amount, output increases by a lot, so, in order to get back onto the isoquant, capital must be taken away. Since capital is NOT very productive, it needs to be reduced a lot to get back onto the isoquant. This flattening of the isoquant as L increases and K falls holds if the marginal factor products are

Answer 1

Diminishing Marginal factor product means that the addition to the output gets small and small as additional quantities of the factor are employed in the production process.

As K reduces initially, L is needed in small amount as its Marginal product is high enough to compensate(in order to be on the same isoquant) the loss of Marginal product caused by the decrease in the amount of K employed. But as the amount of L increases gradually and it reaches at point B, small decrease in K is needed to bring large increase in L because Marginal product of K is higher as fewer of its unit are employed whereas marginal product of L is lower as high amount of units of L is used. Now larger increase in Marginal product through larger increase in L is needed to compensate for the loss in Marginal product due to 1 unit reduction in K partly because Marginal product of K is large and partly bacause Marginal product of L is continuously diminishing and has become small.

Flattening of isoquants, means more L is being substituted for 1 unit decrease in K, holds when Marginal Factor Products are "Diminishing"

Fourth Option is correct.