The Marginal Rate of Technical Substitution diminishes when:
A)marginal utility diminishes.
B)demand curves slope down.
C)isoquants are convex.
D)isoquants are linear.

Question

Quizplus · Accepted Answer

The Marginal Rate of Technical Substitution (MRTS) measures the rate at which a firm can substitute one input for another input while simultaneously holding output constant. When isoquants are convex, it shows that the MRTS diminishes as the firm substitutes more of one input for another. Therefore, option C is correct.

The Marginal Rate of Technical Substitution Diminishes When