Which of the Following Formulas Measures the Rate of Substitution

question 34

Multiple Choice

Which of the following formulas measures the rate of substitution for labor with capital?

• A) -∆L/∆K
• B) -∆K/∆L
• C) ∆K/∆L
• D) ∆L/∆K

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Definitions:

Clearing House Interbank Payments System

An electronic payment system operated by major banks for the purpose of settling transactions among themselves.

Society of Worldwide Interbank Financial Telecommunications

An international organization that provides a network for financial institutions globally to send and receive information about financial transactions.

Client Accounts

Financial accounts held by a financial institution on behalf of its clients, often used for the safekeeping of money, securities, or other assets.

Unbalanced Value Flow

A situation in a business process where the value output is not proportional to the value input, leading to inefficiencies or waste.