- 9 Suppose A Firm Views Its Two Inputs L Labor And K Capital As Perfect Substitutes In Production Under This Circ 1 (41.43 KiB) Viewed 32 times
9. Suppose a firm views its two inputs, L (labor) and K (capital), as perfect substitutes in production. Under this circumstance, which of the following statements is true? a) The firm's production isoquants have the same shape as a consumer's budget line. b) The marginal rate of technical substitution (L for K) is constant. c) The ratio of marginal product of labor (MPL) to marginal product of capital (MPK) is constant. d) The firm will use whichever input costs less. e) All of the above statements are true.