Suppose over time that a firm's production process undergoes capital-saving technological progress. This implies:
A)the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will increase.
B)the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will decrease.
C)the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will increase.
D)the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will decrease.

Question

Quizplus · Accepted Answer

Capital-saving technological progress means that less capital is needed to produce the same level of output, so isoquants shift inward, indicating efficiency. Along any ray from the origin, output increases with less capital.

Suppose Over Time That a Firm's Production Process Undergoes Capital-Saving