Suppose you have capital on the vertical axis and labor on the horizontal axis.The slope of the isoquant measures:
A)the marginal rate of substitution.
B)the marginal product of labor.
C)the marginal product of capital.
D)the marginal rate of technical substitution of capital for labor.

Question

Quizplus · Accepted Answer

The slope of the isoquant measures the rate at which a producer can substitute capital and labor while keeping output constant. This is known as the marginal rate of technical substitution (MRTS). It is a measure of the amount of capital that can be replaced by a unit of labor while keeping output constant, or the amount of labor that can be replaced by a unit of capital while keeping output constant. Therefore, D is the correct answer as it corresponds to MRTS of capital for labor.

Suppose You Have Capital on the Vertical Axis and Labor