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A firm’s technology of production can be described by Q(?, ?) = ?2 ? 2 ....

A firm’s technology of production can be described by Q(?, ?) = ?2 ? 2 . Labor exhibits

_______ marginal product, and the corresponding isoquants slope downward at _______rate as the firm moves from left to right along an isoquant.

A. an increasing; an increasing

B. a constant; an increasing

C. an increasing; a decreasing

D. a decreasing; a decreasing

E. none of the above

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Answer #1

Answer : Option C is correct. In this technology production function, labor exhibits an increasing marginal product , and the corresponding isoquant slope downward at a decreasing rate as the firm moves from left to right along an isoquant. This shows there is a technical substitution available with them as labor units has been increased than capital must be decreased.

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