Suppose that labour is measured on the horizontal axis and capital is measured on the vertical axis.At an interior solution A) MRTS_LK = P_L/P_K B) MRTS_LK = - P_L/P_K C) MRST_LK = P_K/P_L D) MRTA_LK = - P_K/P_L

Question

Quizplus · Accepted Answer

At an interior solution, the marginal rate of technical substitution (MRTS) is equal to the ratio of the marginal products of the two inputs, which is in turn equal to the ratio of the input prices.

Suppose That Labour Is Measured on the Horizontal Axis and Capital