The rate at which a firm can substitute capital for labor and hold output constant is the:
a) marginal rate of production.
b) marginal rate of substitution.
c) marginal rate of factor substitution.
d) law of diminishing marginal returns.
The total output signifies the total quantity of goods and services manufactured by the firms using input factors and raw materials. The total output produced depends on the availability of inputs and production cost.
Answer and Explanation: 1
The correct option is c) marginal rate of factor substitution.
Labor (L) and Capital (K) are the major production factors that manufacture certain...
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fromChapter 3 / Lesson 45
The resources that companies use in the production of goods and services are described as the 'factors of production'. Dive into examples to learn the key terms and types of factors (land, labor & capital), and their importance in modern economics.