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Questions and Answers
What is the principle underlying the rate of technical substitution?
What is the principle underlying the rate of technical substitution?
- Principle of diminishing marginal returns (correct)
- Principle of increasing marginal returns
- Principle of constant marginal returns
- Principle of zero marginal returns
What is the marginal rate of technical substitution (MRTS) a measure of?
What is the marginal rate of technical substitution (MRTS) a measure of?
- The rate of substitution between two variable inputs in the same isoquant (correct)
- The rate of substitution between two variable inputs in different isoquants
- The rate of change in the production function with one variable input
- The rate of change in the production function with a fixed input ratio
What is the term for the line that displays the productive inputs that have the same cost?
What is the term for the line that displays the productive inputs that have the same cost?
- Production possibility frontier
- Supply curve
- Isocost line (correct)
- Isoquant curve
What is the letter 'C' a representation of in the context of isocost lines?
What is the letter 'C' a representation of in the context of isocost lines?
What is the term for the affordable input combinations that a producer could choose from?
What is the term for the affordable input combinations that a producer could choose from?
What is the meaning of the Greek word 'iso' in the context of isocost lines?
What is the meaning of the Greek word 'iso' in the context of isocost lines?
What is the relationship between the marginal rate of technical substitution and the production function?
What is the relationship between the marginal rate of technical substitution and the production function?
What is the purpose of the marginal rate of technical substitution in production?
What is the purpose of the marginal rate of technical substitution in production?
What is the difference between an isoquant curve and an isocost line?
What is the difference between an isoquant curve and an isocost line?
What is the implication of the principle of diminishing marginal returns on the marginal rate of technical substitution?
What is the implication of the principle of diminishing marginal returns on the marginal rate of technical substitution?
