Consider a Firm That Uses Two Inputs, Labor and Capital

question 236

Multiple Choice

Consider a firm that uses two inputs, labor and capital, to produce its output.Assume labor is measured on the horizontal axis and capital on the vertical axis.Which of the following best explains why the marginal rate of technical substitution decreases in absolute value as we move down an isoquant?

• A)The law of diminishing returns: for a given decline in capital, decreasing amounts of labor are required to produce the same level of output.
• B)The law of increasing marginal opportunity cost: if a firm uses less and less capital it must use more and more labor, which drives up the cost of labor.
• C)The law of diminishing returns: for a given decline in capital, increasing amounts of labor are required to produce the same level of output.
• D)The law of imperfect substitutability: labor and capital are not perfect substitutes; therefore, a firm must replace decreases in capital with increases in labor.

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Definitions:

Cognitive Development Theories

A set of theories that describe the processes and mechanisms by which individuals perceive, think, and gain understanding of their environment as they grow and mature.

Piaget

Refers to Jean Piaget, a Swiss psychologist known for his pioneering work in child development and cognitive psychology.

Vygotsky

A Soviet psychologist known for his theory on social development, emphasizing the significance of social interaction in cognitive development.

Developmentally Appropriate

Activities or educational practices that are suited to the age, individual needs, and developmental stage of children.