The marginal rate of substitution between land and labor

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Assume the marginal rate of substitution between land and labor is 2 in producing apples and 1 in producing oranges. This means that if we reduce labor by one in oranges, we need one more unit of land. If we reduce labor by one in apples, we need two more units of land. Conversely, if we increase labor by one in apples, we need two fewer units of land. Thus, if we take one worker from producing oranges and put him or her in apples, and we take one unit of land, and switch it from producing apples to producing oranges, production of oranges is unchaged but production of apples is increased.

Reference no: EM131235903

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