Answered: Q = K x L (Quantity = capital X labor)…

Q = K x L (Quantity = capital X labor) Are MPk and MPL diminishing? Is MRTSL,k diminishing? (Marginal rate of technical substitution)

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

Q = K x L (Quantity = capital X labor)

Are MP_kand MP_Ldiminishing?

Is MRTS_L,kdiminishing? (Marginal rate of technical substitution)

Definition Definition Rate at which one factor of production is decreased in order to maintain the same level of output when another factor of production is increased. MRTS allows for the substitution between factors of production: labor (L) and capital (K) in order to maintain a given level of output.

Expert Solution

Step 1

Marginal Product is an additional unit of output which are produced by an additional unit of labor.

MRTS is the slope of Isoquant curve and it is the ratio of Marginal product of labor and marginal product of capital.

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