The steeper an isoquant is (labor measured on the horizontal axis ) : A. the greater is the level of output. B. the greater is the need to keep capital and labor in fixed proportions. C. the greater is the marginal productivity of labor relative to that of capital. D. the greater is the substitutability between capital and labor.

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Business

Louis Sawyer

15 February, 13:44

The steeper an isoquant is (labor measured on the horizontal axis ) : A. the greater is the level of output. B. the greater is the need to keep capital and labor in fixed proportions. C. the greater is the marginal productivity of labor relative to that of capital. D. the greater is the substitutability between capital and labor.

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Randall Gay · Answer 1

C. the greater is the marginal productivity of labor relative to that of capital

Explanation:

An isoquant is a curve that shows all the combinations of inputs that yield the same level of output.

When adding one factor holding the other factor constant inevitably, leads to lower output levels, the isoquant must become steeper, as more capital is added instead of labour, and flatter when labour is added instead of capital. Returns to capital even decline.