Ask Question
12 November, 14:40

A firm has a production process in which the inputs to production are perfectly substitutable in the long run. Can you tell whether the marginal rate of technical substitution is high or low, or is further information necessary? Discuss. In this example, the marginal rate of technical substitution (MRTS) is

+5
Answers (1)
  1. 12 November, 14:54
    0
    Answer: MRTS = 1

    Explanation

    Since the inputs of the firm are perfectly substitute

    MRTS = DC/DL

    Where DC = change in capital

    = change labour

    This means that the graph of labour on x axis and capital on y axis is a straight line graph
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A firm has a production process in which the inputs to production are perfectly substitutable in the long run. Can you tell whether the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers