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Unformatted text preview: When marginal yield is negative, there is diminishing total returns. If the marginal yield becomes smaller, there is diminishing marginal returns. Diminishing marginal return assumes technology stays constant Isoquant curve efficient combinations of L and K that can produce a single quantity of output Marginal Rate of Technical Substitution (MRTS) slope of the isoquant curve. Tells how many units of K can be replaced by one extra unit of L while keeping production constant-MP L /MP K = K/L = MRTS Returns to Scale how output changes if all inputs are increased by an equal proportion...
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