The Marginal Rate of Technical Substitution (MRTS) quantifies the rate at which one input in the production process can be substituted for another while maintaining the same level of output. It reflects the trade-off between inputs, such as labor and capital, in the production function.

The MRTS is derived from the slope of an isoquant, a curve showing all input combinations producing a given output. Mathematically, the MRTS is expressed as the negative ratio of the marginal product of one input over the marginal product of another input. Specifically, if we consider labor (L) and capital (K) as the two inputs, the MRTS of labor for capital is given by:

Equation1

Here, ΔK and ΔL represent small changes in capital and labor, respectively, and MPL and MPK are the marginal products of labor and capital, respectively. The negative sign indicates that an increase in one input compensates for a decrease in the other when maintaining a level of output.

This concept is essential for firms to optimize their input mix, especially when input prices change, ensuring cost-efficient production while maintaining output levels.

Aus Kapitel 6:

article

Now Playing

6.11 : Marginal Rate of Technical Substitution I

Producer Behavior

86 Ansichten

article

6.1 : Assumptions on Producer Behavior

Producer Behavior

58 Ansichten

article

6.2 : Production Function

Producer Behavior

81 Ansichten

article

6.3 : Short run

Producer Behavior

33 Ansichten

article

6.4 : Marginal Product I

Producer Behavior

29 Ansichten

article

6.5 : Marginal Product II

Producer Behavior

27 Ansichten

article

6.6 : Total Product and Average Product

Producer Behavior

27 Ansichten

article

6.7 : Relation between Total Product, Marginal Product and Average Product

Producer Behavior

76 Ansichten

article

6.8 : Long Run

Producer Behavior

32 Ansichten

article

6.9 : Isoquants

Producer Behavior

20 Ansichten

article

6.10 : Features of Isoquants

Producer Behavior

41 Ansichten

article

6.12 : Marginal Rate of Technical Substitution II

Producer Behavior

31 Ansichten

article

6.13 : Types of Isoquants

Producer Behavior

87 Ansichten

article

6.14 : Isocost Line I

Producer Behavior

32 Ansichten

article

6.15 : Isocost Line II

Producer Behavior

28 Ansichten

See More

JoVE Logo

Datenschutz

Nutzungsbedingungen

Richtlinien

Forschung

Lehre

ÜBER JoVE

Copyright © 2025 MyJoVE Corporation. Alle Rechte vorbehalten