The marginal rate of technical substitution is equal to:
A) the absolute value of the slope of an isoquant.
B) the ratio of the marginal products of the inputs.
C) the ratio of the prices of the inputs.
D) all of the above
E) A and B only

Question

Quizplus · Accepted Answer

The marginal rate of technical substitution (MRTS) measures the rate at which one input can be substituted for another while holding the same level of output. It is equal to the absolute value of the slope of an isoquant because the slope of an isoquant indicates the rate at which one factor can be exchanged for another without changing the level of output. It is also equal to the ratio of the marginal products of the inputs because, at the optimal combination of inputs, the marginal product per dollar spent on each input should be equal. The ratio of the prices of the inputs is not directly related to the MRTS.

The Marginal Rate of Technical Substitution Is Equal To