Question

What are the relationships among marginal products, the marginal rate of technical substitution, and the slopes of isoquants?

Answer 1

Marginal product : It is the change in the total product due to unit change of input . Suppose we increase labor by 1 unit , the amount of change in total product that occurs due to this one unit change of labor is called marginal product of labor .

Marginal rate of technical substitution ( MRTS ) : is the amount by which the quantity of one input has to be reduced when one extra unit of another input is used , so that output remains constant . An isoquant represents the combinations of inputs which produces the same amount of output . So along an isoquant the MRTS shows the rate at which one input may be substituted for another , while maintaining the same level of output ( Q is constant ) . Thus the MRTS is the absolute value of the slope of an isoquant at the point in question .

Hence MP_L = d Q / d L

MP_K = d Q / d K

MP_L / MP_K = d K / d L = MRTS