For each of the following examples, draw a representative
isoquant. What can you say about the...

Question

For each of the following examples, draw a representative
isoquant. What can you say about the marginal rate of technical substitution in
each case? 

a. A firm can hire only full-time employees to produce its
output, or it can hire some combination of fulltime and part-time employees.
For each full-time worker let go, the firm must hire an increasing number of
temporary employees to maintain the same level of output.

b. A firm finds that it can always trade two units of labor
for one unit of capital and still keep output constant. 

c. A firm requires exactly two full-time workers to operate
each piece of machinery in the factory.

Komalavalli · Accepted Answer

Question 1
a)
  The slope of the isoquant estimates the number of part-time workers that can be replaced with full-time workers while production remains constant. At point A, the lower end of the isoquant, the isoquant belongs to the normal axis. This is because only full-time workers can produce without part-time timers. As the isometry increases and we move away from full-time workers,

For each of the following examples, draw a representative isoquant. What can you say about the marginal rate of technical substitution in each case? a. A firm can hire only full-time employees to...

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