Question

Incorrect Question 13 0/3 pts With its current levels of input use, a firm's MRTS IS 1/3 (when capital is on the vertical axis and labor is on the horizontal axis). This implies... The term could practice 2 more unity of output it increased its use of choltal tv one unit holding labor contanti | The form could produce 3 more units of output if it increased its use of labor by one unit holding capital consta The marginal product of laboris Times the main product of capital di The marginal product of capitaines the marroduct of labor w the reduce its capital stock by one unitat would have to hire more workers to maintain its current level of output

Answer 1

Answer

Option e - if the firm reduced it's capital stock by one unit, it would have to hire 3 more workers to maintain its current level of output.

Explanation : MRTS(Marginal Rate of Technical Substitution) is an economic theory that illustrates the rate at which one factor must decrease so that the same level of productivity can be maintained when another factor is increased. The MRTS reflects the give and take between factors , such as capital and labor that allow a firm to maintain a constant output. The MRTS shows the rate at which you can substitute one input, such as labor, for another input, such as capital, without changing the level of resulting output.

MRTS equals the slope of an isoquant. An isoquant is a curve which represents combinations of different factors of production ie, labor and capital that yield the same total production.

Here, with its current level of input use, a firm's MRTS is given as 1/3, which denotes that amount of capital needed to substitute one unit of labor so as to remain on same isoquant.

Answer 2

Answer

Option e - if the firm reduced it's capital stock by one unit, it would have to hire 3 more workers to maintain its current level of output.

Explanation : MRTS(Marginal Rate of Technical Substitution) is an economic theory that illustrates the rate at which one factor must decrease so that the same level of productivity can be maintained when another factor is increased. The MRTS reflects the give and take between factors , such as capital and labor that allow a firm to maintain a constant output. The MRTS shows the rate at which you can substitute one input, such as labor, for another input, such as capital, without changing the level of resulting output.

MRTS equals the slope of an isoquant. An isoquant is a curve which represents combinations of different factors of production ie, labor and capital that yield the same total production.

Here, with its current level of input use, a firm's MRTS is given as 1/3, which denotes that amount of capital needed to substitute one unit of labor so as to remain on same isoquant.