If the Marginal Rates of Technical Substitution Between Two Firms

question 66

Multiple Choice

If the marginal rates of technical substitution between two firms are not equal,then:

• A)the society is not on the production possibility frontier.
• B)the economy ends up producing on the contract curve of the economy's Edgeworth production box.
• C)goods are not allocated between consumers efficiently.
• D)the isoquants of the firms do not intersect each other.

---

Definitions:

Fixed Costs

Stable costs encompassing rent, salaries, and insurance, unaffected by variations in production or sales levels.

Break-Even

The point where overall expenses match overall income, leading to neither a profit nor a loss.

Variable Costs

Expenditures that adjust according to the quantity of goods or services produced by an enterprise.

Fixed Costs

Regular outgoings that stay the same whether production or sales rates increase or decrease, for instance, rental costs or salary payments.