Question

QUESTION 34

1. The MRTS of labor for capital tends to be higher

   		the larger the quantity of capital already employed
   		the lower the quantity of capital already employed
   		when a firm is choosing baskets that are inefficient
   		in the short run compared to the long run

QUESTION 35

1. The object of diversification is

   		to reduce risk and fluctuations in income.
   		to reduce risk, but not to reduce fluctuations in income.
   		to reduce fluctuations in income, but not to reduce risk.
   		neither to reduce risk, nor to reduce fluctuations in income.

QUESTION 36

1. The rate at which one input can be reduced per additional unit of the other input, while holding output constant, is measured by the

   		marginal rate of substitution.
   		marginal rate of technical substitution.
   		slope of the isocost curve.
   		average product of the input.

Answer 1

Ans34) the correct option is a) the larger the quantity of capital already employed

Ans35) the correct option is a) to reduce risk and fluctuations in income.

Ans36) the correct option is b) marginal rate of technical substitution