The Marginal Rate of Technical Substitution Is

question 305

Multiple Choice

The marginal rate of technical substitution is

• A)the rate at which a firm is able to substitute one input for another, while keeping total cost constant.
• B)the rate at which a firm is able to substitute one input for another, while keeping the level of output constant.
• C)the rate at which a firm is able to institute positive technological changes to its production process.
• D)the rate at which a firm is able to increase its output by replacing labor with technology.

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Definitions:

Labor Demand

The total amount of workers that employers want to hire at a given wage rate and in a given time period, reflecting the quantity of labor firms need to produce goods and services.

Productive Resource

Resource inputs used in the production of goods and services, such as labor, land, and capital.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to analyze the effect of one variable on another while holding all other relevant factors constant.

Total Income

The sum of all earnings obtained by an individual or entity, including wages, salaries, benefits, and income from investments, before any deductions.