-Refer to Figure 7.3.Suppose a firm moves along the isoquant from point a to point b.The rate of substitution for labour with capital is
A) 2
B) -2
C) 1/2
D) -1/2

Question

-Refer to Figure 7.3.Suppose a firm moves along the isoquant from point a to point b.The rate of substitution for labour with capital is
A) 2 
B) -2 
C) 1/2 
D) -1/2

Quizplus · Accepted Answer

The rate of substitution for labour with capital is the absolute value of the slope of the isoquant. The slope of the isoquant is -2, so the rate of substitution for labour with capital is 2.