Please answer only # 4 and 5 For each of the following cases, determine whether the firm should(A) Use more labor and less capital, or(B) Use more capital and less labor.1. The marginal rate of technical substitution is 2 (i.e., the marginal product of labor is twice themarginal product of capital) and the input price ratio is 3 (i.e., a unit of labor costs three times as muchas a unit of capital)2. The marginal rate of technical substitution is 2 (i.e., the marginal product of labor is twice themarginal product of capital) and the input price ratio is 1 (i.e., a unit of labor costs the same as a unit ofcapital)3. The marginal rate of technical substitution is initially equal to the input price ratio, but the firm'smachines depreciate, so that the marginal product of capital decreases.4. The marginal rate of technical substitution is initially equal to the input price ratio, but the firmsuccessfully negotiates a lower rate of rent for their machines, so that the price of capital decreases.5. The marginal rate of technical substitution is initially equal to the input price ratio, but a neworganizational plan increases the marginal product of labor.

Marginal rate of technical substitution (MRTS) shows the substitution of two factors : labor and…

4. The marginal rate of technical substitution is initially equal to the input price ratio, but the firm successfully negotiates a lower rate of rent for their machines, so that the price of capital decreases. 5. The marginal rate of technical substitution is initially equal to the input price ratio, but a new organizational plan increases the marginal product of labor.

4. The marginal rate of technical substitution is initially equal to the input price ratio, but the firm successfully negotiates a lower rate of rent for their machines, so that the price of capital decreases. 5. The marginal rate of technical substitution is initially equal to the input price ratio, but a new organizational plan increases the marginal product of labor.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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