At each point on an isoquant, the marginal rate of technical substitution (MRTS) of labor for capital is equal to the marginal product of labor divided by the marginal product of capital.

Question

Quizplus · Accepted Answer

This statement is true. The MRTS of labor for capital measures how many units of capital can be replaced by one unit of labor, while keeping the output constant. This is equal to the ratio of the marginal product of labor to the marginal product of capital at each point on the isoquant.

At Each Point on an Isoquant, the Marginal Rate of Technical