The Marginal Rate of Technical Substitution of Labor for Capital

question 74

Multiple Choice

The marginal rate of technical substitution of labor for capital is defined as:

• A)The rate at which the quantity of capital can be decreased for every one unit increase in the quantity of labor, holding the quantity of output constant
• B)The rate at which the quantity of capital must be increased for every one unit decrease in the quantity of labor, holding the cost of output constant.
• C)The rate at which the cost of labor and capital increases as output rises.
• D)The rate at which output rises as capital increases, holding labor constant.

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Definitions:

Current Ratio

Current Ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Contingent Liabilities

Potential liabilities that may or may not become actual liabilities, depending on the outcome of uncertain future events.

Environmental Awards

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EPA Fine

Penalties imposed by the Environmental Protection Agency for violations of environmental laws and regulations.