Question

The MRTSLK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use _____ labor and _____ capital, and the tablet industry should use _____ labor and _____ capital. A) more; more; less; less B) less; less; more; more C) more; less; less; more D) less; more; more; less

Answer 1

The MRTSLK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use less labor and more capital, and the tablet industry should use more labor and less capital.

reason:

MRTS is the rate at which switch between factors is decided by the producer to minimize cost of production. Between the two, capital is cheaper for Cell phone industry. It has to use 5 units of capital to replace a unit of labor; while tablet industry needs 8 units of capital in place of a unit of labor. So, Cell phone industry can use more capital (and less labor); Tablet industry can use less capital (and more labor).