If capital and labor are perfect substitutes in a production function, the isoquants for this function will be
A)concave from above.
B)convex from above.
C)a straight line.
D)any one of these depending on the particular combination of labor and capital employed.

Question

Quizplus · Accepted Answer

If capital and labor are perfect substitutes, they can be used in any proportion to produce the same output level. Therefore, the isoquants will be linear or straight lines, indicating that the same level of output can be produced using any combination of capital and labor, as long as the ratio of input use is maintained. The answer is not D because isoquants for perfect substitutes have identical slopes, which means that they are parallel to each other and not dependent on any specific input combination.

If Capital and Labor Are Perfect Substitutes in a Production