Part 1 A firm's production function is given by the equation /(L. K) = 10.00L + 20.00K, where L and K are labor and capital inputs, respectively. What is the technical rate of substitution (TRS) in absolute value for this firm? (Assume that labor is the horizontal axis variable and capital is the vertical axis variable). Part 2 See Hint As the number of laborers increases, the technical rate of substitution Choose one: O A increases. O B. decreases. O C. is constant and does not change. OD. increases then decreases, See Hint

Part 1 A firm's production function is given by the equation /(L. K) = 10.00L + 20.00K, where L and K are labor and capital inputs, respectively. What is the technical rate of substitution (TRS) in absolute value for this firm? (Assume that labor is the horizontal axis variable and capital is the vertical axis variable). Part 2 See Hint As the number of laborers increases, the technical rate of substitution Choose one: O A increases. O B. decreases. O C. is constant and does not change. OD. increases then decreases, See Hint

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Part 1
A firm's production function is given by the equation /(L. K) = 10.00L + 20.00K, where L and K are labor and capital inputs,
respectively.
What is the technical rate of substitution (TRS) in absolute value for this firm? (Assume that labor is the horizontal axis variable
and capital is the vertical axis variable).
Part 2
See Hint
As the number of laborers increases, the technical rate of substitution
Choose one:
O A increases.
O B. decreases.
O C. is constant and does not change.
OD. increases then decreases.
See Hint

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Step 1: Define production function.

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Step 3: Calculate the change in technical rate of substitute.

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