For the production function Q = aL + bK, where a and b are constants, the $MR T S_{L ,K}$=

A) declines as the firm substitutes labor for capital.
B) remains constant as the firm substitutes labor for capital.
C) implies upward-sloping, straight-line isoquants.
D) is undefined.

Question

For the production function Q = aL + bK, where a and b are constants, the $MR T S_{L ,K}$=

A) declines as the firm substitutes labor for capital.
B) remains constant as the firm substitutes labor for capital.
C) implies upward-sloping, straight-line isoquants.
D) is undefined.

Quizplus · Accepted Answer

The production function Q = aL + bK is a linear function, indicating perfect substitutability between labor (L) and capital (K). Therefore, the marginal rate of technical substitution (MRTS) remains constant as the firm substitutes labor for capital.

For the Production Function Q = AL + BK, Where MRTSL,KMR T S_{L ,K}MRTSL,K​

For the Production Function Q = AL + BK, Where $MR T S_{L ,K}$