The marginal rate of technical substitution is the ratio of
A) the marginal product of labor to the marginal product of capital.
B) capital to labor.
C) capital to the price of capital.
D) labor to the price of labor.

Question

Quizplus · Accepted Answer

The marginal rate of technical substitution (MRTS) is defined as the rate at which one input (e.g., labor) can be substituted for another (e.g., capital) in the production process, while keeping the level of output constant. It is calculated as the ratio of the marginal product of labor to the marginal product of capital.

The Marginal Rate of Technical Substitution Is the Ratio of