You are currently using three printing presses and five employees to print 100 sales manuals per hour. If the MRTS at this point is 0.5 (capital is on the vertical axis of the isoquant map), then you would be willing to exchange ________ employees for one more printing press in order to maintain current output.
A) zero
B) one
C) two
D) three

Question

Quizplus · Accepted Answer

The MRTS (marginal rate of technical substitution) is the rate at which a firm is willing to substitute one input for another while maintaining constant output. In this case, the MRTS is 0.5, meaning that the firm is willing to give up 0.5 employees for every extra printing press they add to the production process, while maintaining output.

Since the firm is currently using three printing presses and five employees to produce 100 sales manuals per hour, we can assume that this is the most efficient combination of inputs. If they were to exchange more than two employees for one more printing press, their output would likely decrease due to a lack of labor.

Therefore, the best choice is C) two. The firm would be willing to exchange two employees for one more printing press to maintain their current output level.

You Are Currently Using Three Printing Presses and Five Employees