The producer will substitute capital for labour till he reaches that point of isoquant at which,
A. The price of the good he produces equals wage rate.
B. Marginal rate of technical substitution equals interest rate.
C. Marginal rate of technical substitution equals marginal revenue.
D. Marginal rate of technical substitution equals the ratio of marginal productivity of labour and capital.
Answer:D
The producer will substitute capital for labour till he reaches that point of isoquant at which,
A. The price of the good he produces equals wage rate. B. Marginal rate of technical substitution equals interest rate. C. Marginal rate of technical substitution equals marginal revenue. D. Marginal rate of technical substitution equals the ratio of marginal productivity of labour and capital.