MRS in Economics: What It Is and the Formula for Calculating It
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You must c C reate an account to continue watching
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Substitution occurs when firms replace one input for another, as when a farmer uses tractors rather than labor when wages rise. Consider the following changes in a firm's behavior. Which represent substitution of one factor for another with an unchanged technology, and which represent technological change? Illustrate each with a graphical production function. a. When the price of oil increases, a firm replaces an oil-fired plant with a gas-fired plant. b. A bookseller reduces its sales staff by
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