The marginal rate of technical substitution:
A)equals the marginal product of capital times the marginal product of labor.
B)measures the rate at which marginal product declines as inputs are increased.
C)measures the degree to which one input can be substituted for another,output held constant.
D)is the horizontal distance between two isoquants.

Question

Quizplus · Accepted Answer

The marginal rate of technical substitution (MRTS) measures the degree to which one input can be substituted for another while holding output constant. In other words, it measures the amount by which the quantity of one input can be reduced with a one-unit increase in the quantity of the other input, while the output remains constant. Therefore, option C is the correct choice. Option A is incorrect because it defines the marginal product of labor and capital, not the MRTS. Option B is incorrect because it refers to the diminishing marginal returns of inputs as more are added, not the MRTS. Option D is incorrect because it refers to the distance between two isoquants, not the MRTS.

The Marginal Rate of Technical Substitution