in-a-factory-setting-if-the-mrts-between-labor-and-capital-is-2-what-does-this-i

Question

In a factory setting, if the MRTS between labor and capital is 2, what does this imply about substituting labor for capital?

Accepted Answer

Two units of labor can replace one unit of capital while maintaining the same output.

Answer

Labor and capital are perfect substitutes.

Answer

One unit of labor can replace two units of capital while maintaining the same output.

Answer

Labor and capital cannot be substituted.