Question

4. Grapes are harvested by hand. One worker and one pair of stem clippers (capital) can produce 50 pound of grapes. There is no substitution between workers and stem clippers.

a) Graph the isoquants for Q=100/ Q=200, Q=300 pounds of grapes

. b)What is the MRTSlk? What does this tell you about the two inputs?

Answer 1

The situation presented in the question refers to perfect complementary inputs. Perfect complementary inputs are those that are always used together in a fixed proportion.

It is given that one worker and one pair of stem clippers can produce 50 pound of grapes. So, it means for producing 100 pound of grapes two worker and two pair of stem clippers are needed. Similarly, for producing 200 pound of grapes four worker and four pair of stem clippers are needed, and for producing 300 pound of grapes six worker and six pair of stem clippers are needed. The isoquants will look like the following.

As can be seen from the shape of the isoquants the marginal rate of technical substitution (MRTS) is 0 on the horizontal segment while the MRTS is equal to infinity on the vertical segment. This is because in the case of perfect complementary inputs, both the inputs need to be increased in fixed proportion to increase output. Increasing one input will not increase the level of output.