question archive The absolute value of the marginal rate of technical substitution for a cost minimizing firm that uses only labor and capital is 10 (the amount of capital that can be substituted per unit of labor)
The absolute value of the marginal rate of technical substitution for a cost minimizing firm that uses only labor and capital is 10 (the amount of capital that can be substituted per unit of labor)
Subject:EconomicsPrice:9.82 Bought3
The absolute value of the marginal rate of technical substitution for a cost minimizing firm that uses only labor
and capital is 10 (the amount of capital that can be substituted per unit of labor). The wage rate for labor is
$10. If the only inputs are capital and labor, what is the rental rate for capital in dollars?
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The rental rate of capital is $1
Step-by-step explanation
Marginal rate of substitution=wages(price of labor)/ rent(price of capital)
10=$10/rent(price of capital)
Rent(price of capital)=$10/10
=$1
The rental rate of capital is $1
