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Unformatted text preview: firm's MRTSlk is how much less capital the firm would need to use, holding
output constant, if it increased its use of labor by 1 unit.
MRS= slope of indifference curve MRTS= slope of isoquant
if labor and capital were
MRTS= how much of the first unit you have to give up to get another of the second
switched it would be
67. Low-skilled workers, most poor, likely want to work more than they can at their
68. Imagine a world where everyone has to pay for their own medical care. Suppose that
smoking cigarettes creates no negative or positive external effects, but, as is well
known, causes a lot of smokers to get lung cancer. If the government does not interfere
in the cigarette market, then________.
A) The market equilibrium quantity of cigarettes smoked will be greater than the
socially efficient number.
B) There is not enough information to answer the question.
C) The market equilibrium quantity of cigarettes smoked will be the efficient num...
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This document was uploaded on 02/18/2014 for the course ECON 2010 at Colorado.
- Fall '07