If capital is fixed, but a firm varies labor
A)the firm stays on the same isoquant.
B)the firm moves to a new isoquant.
C)the firm might move to a new isoquant, depending on how much labor is added.
D)the firm's output will be dependent on the marginal rate of technical substitution.

Question

Quizplus · Accepted Answer

When a firm varies labor while keeping capital fixed, it changes the input combination used for production, leading to a change in output level. This results in the firm moving to a new isoquant, which represents a different level of output.

If Capital Is Fixed, but a Firm Varies Labor