Question
The production function for fish harvesting is Cobb-Douglas. Currently, the Marginal Rate of Technical Substitution (MRTS) between Labor (L) and Capital (K) is higher than
The production function for fish harvesting is Cobb-Douglas. Currently, the Marginal Rate of Technical Substitution (MRTS) between Labor (L) and Capital (K) is higher than the wage to rent ratio (MRTS > w/r). This means that,
a.More labor and less capital should be used to lower costs
b.More capital and less labor should be used to lower costs
c.Labor and Capital being used are already minimizing costs
d.We need to know the fixed costs of production to determine if costs are minimized or not
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Business Statistics For Contemporary Decision Making
Authors: Ken Black
9th edition
978-1-119-3208, 9781119334781, 1119334780, 1119320895, 978-1119320890
