If the inputs to a production process are perfect substitutes and the marginal rate of technical substitution is equal to the ratio of the prices of the two inputs, the firm can choose from a virtually infinite array of combinations of the two inputs
to minimize the costs of producing a given level of output. Indicate whether the statement is true or false
TRUE
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Activities that encourage faster growth are
A) high levels of consumption and low levels of savings. B) high levels of saving and investment in human capital. C) imposing trade barriers to limit international trade and thereby protect national industries. D) limiting property rights so that everyone can use any invention. E) taxes on saving that serve to encourage more spending and less saving.
Assume that a company is producing at a point beyond where diminishing returns has already set in. If the firm cuts back on production what would you expect should happen to the marginal product of labor and why?
What will be an ideal response?