Suppose capital and labor are perfect complements for a particular production process. If the price of labor decreases, holding the price of capital and the level of output constant, the firm should: use more capital and less labor. eliminate all use of labor. use more labor and less capital. use the same amounts of capital and labor. For the production function Q = aL + bK, where a and b are constants, the MRTSL,K: remains constant as the firm substitutes labor for capital. is undefined. declines as the firm substitutes labor for capital. implies upward-sloping, straight-line isoquants.
Suppose capital and labor are perfect complements for a particular production process. If the price of labor decreases, holding the price of capital and the level of output constant, the firm should: use more capital and less labor. eliminate all use of labor. use more labor and less capital. use the same amounts of capital and labor. For the production function Q = aL + bK, where a and b are constants, the MRTSL,K: remains constant as the firm substitutes labor for capital. is undefined. declines as the firm substitutes labor for capital. implies upward-sloping, straight-line isoquants.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![Suppose capital and labor are perfect complements for a particular production process. If the price of labor
decreases, holding the price of capital and the level of output constant, the firm should:
use more capital and less labor.
eliminate all use of labor.
use more labor and less capital.
use the same amounts of capital and labor.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42d08329-33e0-45d4-8ee5-09293da57287%2F8394751e-93b3-4ca3-846a-68ac38a7533b%2Fag8q7by_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose capital and labor are perfect complements for a particular production process. If the price of labor
decreases, holding the price of capital and the level of output constant, the firm should:
use more capital and less labor.
eliminate all use of labor.
use more labor and less capital.
use the same amounts of capital and labor.
![For the production function Q = aL + bK, where a and b are constants, the MRTSL,K:
remains constant as the firm substitutes labor for capital.
is undefined.
declines as the firm substitutes labor for capital.
implies upward-sloping, straight-line isoquants.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42d08329-33e0-45d4-8ee5-09293da57287%2F8394751e-93b3-4ca3-846a-68ac38a7533b%2Fpnmecrb_processed.png&w=3840&q=75)
Transcribed Image Text:For the production function Q = aL + bK, where a and b are constants, the MRTSL,K:
remains constant as the firm substitutes labor for capital.
is undefined.
declines as the firm substitutes labor for capital.
implies upward-sloping, straight-line isoquants.
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