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      Question

      If a production function is homogeneous of degree n, the

      Marginal Rate of Technical Substitution (MRTS) will be:
      A Dependent on the absolute scale of inputs Correct Answer Incorrect Answer
      B Homogeneous of degree n-1 Correct Answer Incorrect Answer
      C Homogeneous of degree zero Correct Answer Incorrect Answer
      D A linear function of the output level Correct Answer Incorrect Answer

      Solution

      A key property of homogeneous production functions is that the MRTS depends only on the ratio of inputs (K/L), not the absolute scale. Since scaling both inputs by a factor k leaves the ratio unchanged, the MRTS remains the same. Mathematically, this means it is homogeneous of degree zero.

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