Suppose that, at a given production plan, the marginal product of labor is 6 and the marginal product of capital is 3.In a graph with labor on the horizontal and capital on the vertical axis, this implies that the technical rate of substitution at that production plan is
A)-1/2
B)-2
C)-18
D)None of the above

Question

Quizplus · Accepted Answer

The technical rate of substitution (TRS) is the rate at which one input (e.g., labor) can be substituted for another (e.g., capital) while keeping the output level constant. It is calculated as the negative ratio of the marginal product of labor (MPL) to the marginal product of capital (MPK), which in this case is -6/3 = -2.

Suppose That, at a Given Production Plan, the Marginal Product