Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Marginal rate of technical substitution in the theory of production is similar to the concept of marginal rate of substituent to in the indifference curve analysis of consumer demand. Marginal rate of technical substitution in the indifference curve analysis of consumer demand. Marginal rate of technical of labour for capital may be defined as the number of unties of capital which can be replaced by one unit of labour the level of output remaining unchanged.
Each of the factor combinations A, B, C, D, and E yields the same level of output. Moving down from combination A to combination B, 4 units of capital are substituted by 1 unit of labor in the production process without any change in the level of output. Therefore marginal rate of technical substitution of labour for capital is 4 at this stage. Switching from input combination B to input combination C involves the replacement of 3 unties of capital by an additional unties of labour output remaining the same. Thus the marginal rate of technical substitution is now 3. Likewise marginal rate of technical substitution of labor for capital between factor combinations C and D is 2, and between factor combinations D and E it is 1.
The marginal rate of technical substitution at a point on an Isoquants (an equal product curve) can be known form the slope of the Isoquants at that point. Consider a small movement down the equal product curve from G to H in where small amounts of capital say ΔK / ΔL. Thus marginal rate of technical substitution of about for capital = slope = ΔK/ ΔL.
Slope of the Isoquants at a point and therefore the marginal rate of technical substitution (MRTS) between factors can also be known by the slope of the tangent drawn on the Isoquants at that point.
An important point to be noted about the marginal rate of technical substitution is that it is equal to the ratio of the marginal physical products of the two factors. Since by definition output remains constant on an Isoquants the loss in physical output from a small reduce to in capital will be equal to the gain in physical output form a small increment in labour. The loss in output is equal to the marginal physical product of capital (MP) multiplied by the amount of reduction in capital. The gain in output is equal to the marginal physical product of labour (MP) multiplied by the increment in labour.
Consider what would happen if a taxes of 10000$ was imposed on imported automobiles on dealers.Using a demand and supply diagram, show its impact of price and quantity. Suppose the
Economic Cycle The economic cycle is the long-standing sample of alternating times of economic growth (expansion) and decline (recession), followed by changing economic indica
illustration for demand of big macs using indifference curve and budget line
Secondhand smoke globally kills more than 600,000 people each year, accounting for 1 percent of all deaths worldwide, according to a new study. . . . Researchers estimated th
1. The figure below is historical production data from the Kuparuk River field. The OOIP is 5,332,979 Mstb and cumulative recovery through 12/31/2004 is 1,971,200,654 stb.
Choosing Inputs How to minimize cost for the given level of output. We can do so by combining Isocosts with Isoquants Producing a
prefrence towards risk the demand for risky assets,
Introduction for a natural monopoly assignment
on what grounds is consumer surplus criticised?
indifference curve and budget line
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd