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(Figure: Capital and Labor IV) Which of the following statements is (are) TRUE? Capital (K) 15 12 9 6 3 to-11 0 3 4 5 6 7 8 9
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Answer #1

At point A where the MRTS is high, labor is scarce and capital is abundant. To replace a worker, the firm must use a lot of capital. At point B the MRTS is low. Labor is abundant and capital is scarce. It takes just a little capital to replace one worker in order to maintain the same output. So 3rd option is correct.

It is easier for a small amount of additional labour to replace a large amount of capital at point A than at point B.


answered by: ANURANJAN SARSAM
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Answer #2

At point A where the MRTS is high, labor is scarce and capital is abundant. To replace a worker, the firm must use a lot of capital. At point B the MRTS is low. Labor is abundant and capital is scarce. It takes just a little capital to replace one worker in order to maintain the same output. So 3rd option is correct.

It is easier for a small amount of additional labour to replace a large amount of capital at point A than at point B.

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