If the Marginal Rate of Technical Substitution of Labor for Capital

question 26

Multiple Choice

If the marginal rate of technical substitution of labor for capital is 6, the price of labor is $18, and the price of capital is $9, then the firm

• A) can substitute one unit of capital for six units of labor and keep output unchanged.
• B) should use more labor and less capital.
• C) should use more capital and less labor.
• D) both a and b
• E) both a and c

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Definitions:

Dorsal Root

The part of a spinal nerve that carries sensory neural information to the spinal cord from the peripheral organs.

Motor Root

The part of a spinal nerve that carries motor signals from the spinal cord to the muscles.

Golgi Tendon Reflex

A protective mechanism that prevents muscle damage during excessive force generation by causing muscle relaxation.

Muscle Spindle

Three to 10 specialized muscle fibers supplied by gamma motor neurons and wrapped in sensory nerve endings; detects stretch of the muscle and is involved in maintaining muscle tone.