If factor inputs are perfect substitute for each other the marginal rate of technical substitution will be _________.

constant

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

zero

No worries! We‘ve got your back. Try BYJU‘S free classes today!

increasing

No worries! We‘ve got your back. Try BYJU‘S free classes today!

decreasing

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A constant
When the inputs required to make a product are perfect substitutes, it means the opportunity cost of choosing the other input is the same as giving up another. Therefore, if labor and capital are perfect substitutes it would mean the opportunity cost of choosing both would be the same.

Suggest Corrections

Similar questions

A line that connects all points where the marginal rate of technical substitution is equal to the ratio of input prices is called the

Join BYJU'S Learning Program