19- The firm's marginal rate of technical substitution is diminishing. 18 17 16 15 14 A firm finds that it can always trade five units of labor for one unit of capital and still keep output constant. Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label this line 'Isoquant'. 13 12 11 10- Carefully follow the instructions, and only draw the required objects. 9. 8. 7- 6- 3. 10 12 14 16 18 20 Labor Capital
19- The firm's marginal rate of technical substitution is diminishing. 18 17 16 15 14 A firm finds that it can always trade five units of labor for one unit of capital and still keep output constant. Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label this line 'Isoquant'. 13 12 11 10- Carefully follow the instructions, and only draw the required objects. 9. 8. 7- 6- 3. 10 12 14 16 18 20 Labor Capital
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:20-
The firm's marginal rate of technical substitution is diminishing.
19-
18-
A firm finds that it can always trade five units of labor for one unit of capital and still keep output
17-
16-
15-
constant.
14-
Using the line drawing tool, graph an isoquant curve for the firm in the middle diagram. Label
this line 'Isoquant'.
13-
12-
11-
Carefully follow the instructions, and only draw the required objects.
10-
9-
8-
7-
6-
5-
4-
3-
2-
1
0+
2
6.
8
10
12
14
16
18
20
Labor
Capital
Expert Solution
Step 1
A firm finds that it can always trade five units of labor for one unit of capital and still keep output constant.
It implies the marginal rate of technical substitution (MRTS) of labor for capital is constant and equal to 1/5.
MRTS is a slope of isoquant.
MRTS is constant, it means the isoquant curve is linear.
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