-Refer to Figure 7.3.The marginal rate of technical substitution for labour with capital at 120 workers is represented by the slope
A) Of line ac
B) Of line ed
C) Of line ab times negative one
D) Of line ed times negative one

Question

-Refer to Figure 7.3.The marginal rate of technical substitution for labour with capital at 120 workers is represented by the slope
A) Of line ac 
B) Of line ed 
C) Of line ab times negative one 
D) Of line ed times negative one

Quizplus · Accepted Answer

The marginal rate of technical substitution (MRTS) is the rate at which one input (e.g., labor) can be substituted for another (e.g., capital) while keeping output constant. It is represented by the slope of the isoquant curve at a given point. The negative sign indicates the trade-off direction - as one input increases, the other decreases. Line ed, when multiplied by negative one, correctly reflects this slope and trade-off at 120 workers.