The rate at which a firm can substitute capital for labour and hold output constant is the ?
Correct answer: A. marginal rate of factor substitution
- A. marginal rate of factor substitution
- B. marginal rate of substitution
- C. law of diminishing marginal returns.
- D. marginal rate of production
Explanation
The marginal rate of factor substitution measures how much capital can replace labour while output remains unchanged, along an isoquant. It is also commonly called the marginal rate of technical substitution.
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