Assuming that w and r are both positive, if the long-run expansion path is horizontal, then
A) MPK = 0.
B) MRTS is a function of capital only.
C) w = r.
D) All of the above.
Answer: MRTS is a function of capital only.
Assuming that w and r are both positive, if the long-run expansion path is horizontal, then
A) MPK = 0.
B) MRTS is a function of capital only.
C) w = r.
D) All of the above.
Answer: MRTS is a function of capital only.