A production function has well-defined marginal products at every input combination.If factor x is shown on the horizontal axis and factor y is shown on the vertical axis, the slope of the isoquant through a point (x*, y*)is the negative of the ratio of the marginal product of x to the marginal product of y.

Question

Quizplus · Accepted Answer

This statement is true. The slope of an isoquant indicates the rate at which factor y must be substituted for factor x to maintain the same level of output. The negative of the ratio of the marginal product of x to the marginal product of y indicates the rate at which factor y must be substituted for factor x to maintain the same level of output, so the statement is correct.

A Production Function Has Well-Defined Marginal Products at Every Input