If the marginal rate of technical substitution for a cost minimizing firm is -10, and the wage rate for labor is $5, what is the rental rate for capital in dollars
1 answer:
Answer:
$ -0.5
Explanation:
From the information given:
The marginal rate of technical submission MRTS = -10
Wages W = $5
The marginal rate of technical submission MRTS = Wages/ Rental rate of capital
∴
Rental rate of capital = Wages/marginal rate of technical submission MRTS
Rental rate of capital = 5/-10
Rental rate of capital = $ -0.5
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