XYZ Corp. produces 1,000 units of output (along the same isoquant) using various combinations of capital (K) and labor (L). At point A (along the same isoquant), the firm uses 30 units of capital and 3 units of labor. When it moves to point B (along the same isoquant), it uses 12 units of capital and 6 units of labor. Based on this information, the firm'selasticity of input substition ()is? Hint:You may want to draw a graph of the firm's isoquant and identify points A and B (and their corresponding K/L combinations). a. 1 b. 0 c. 5 d. (positive infinity)

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To determine the elasticity of input substitution we need to calculate the ratio of the percentage c... View the full answer