One Way to Explain the Convexity of Isoquants Is to Say

question 64

Multiple Choice

One way to explain the convexity of isoquants is to say that

• A) as labor increases and capital decreases, MP_L rises while MP_K falls.
• B) as labor increases and capital decreases, MP_L falls while MP_K rises.
• C) as labor increases and capital decreases, MP_L and MP_K both fall.
• D) as labor increases and capital decreases, MP_L and MP_K both rise.

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Definitions:

Workers Specialize

When workers focus on a narrow set of tasks or acquire specialized skills, leading to increased efficiency and productivity.

Command System

A type of economic system where production, investment, prices, and incomes are determined centrally by a government.

Laissez-Faire Capitalism

An economic system where private parties are free to conduct business transactions with minimal government intervention or regulation.

Division of Output

The allocation of the total quantity of goods or services produced among various consumers or markets.