Question

what will be the MRTS,if the quantity of labor used increases by one unit , the firm can give up 2 units of capital and still produce the same output?

a) 1/2

b)1

c) 4

d) 2

Answer 1

Answer:

d. 2

Reason:

Given:

Change in Labor = + 1

Change in Capital = -2

MRTSlk = Change in Capital/ Change in Labor

Putting the above values in the MRTS formula we have,

MRTSlk = -2/1 = -2

Hence the marginal rate of technical substitution in the above case will be 2.

Answer 2

Answer:

b

Explanation:

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