If a production function is homothetic, the MRTS:
A)changes unpredictably along a ray from the origin.
B)is constant along a ray from the origin.
C)decreases along a ray from the origin.
D)increases along a ray from the origin.

Question

Quizplus · Accepted Answer

In a homothetic production function, the MRTS is constant along a ray from the origin. This means that for any given ratio of inputs, the MRTS remains constant, regardless of the level of total factor productivity or output.

If a Production Function Is Homothetic, the MRTS