The marginal rate of technical substitution is: The rate at which a producer is able to exchange, without affecting the quantity of output produced, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total cost of inputs, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total inputs used, a little bit of one onput for a little bit of another onput. A measure of the case or difficulty with which a producer can substitute one technique of production for another.

The marginal rate of technical substitution is: The rate at which a producer is able to exchange, without affecting the quantity of output produced, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total cost of inputs, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total inputs used, a little bit of one onput for a little bit of another onput. A measure of the case or difficulty with which a producer can substitute one technique of production for another.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.9P

See similar textbooks

Similar questions

The marginal rate of substitution of both of them are not correct.
There are two firms in the economy. Each firm employs positive amounts of capital and labour. The technology satisfies diminishing marginal rate of technical substitution of labour for capital. Currently, A’s marginal rate of technical substitution of labour for capital is 4 while B’s marginal rate of technical substitution of labour for capital is 2. A. Is the current production of the two firms efficient? If not, describe an exchange of inputs that would improve efficiency. B. Can these production levels of the two firms be observed in a perfectly competitive equilibrium of a production and exchange economy? Explain.
Distinguish between the Marginal Rate of Technical Substitution and Elasticity of Substitution in production
Describe the concept of the marginal rate of technical substitution
a) For an output level of 40 units, calculate the marginal rate of technical substitution between points A and B. b) Also for an output level of 40 units, calculate the marginal rate of technical substitution between points D and E
The production function is Q = K.6 L.4. The marginal rate of technical substitution is: 2/3 K-1 L. K-1 L-1. 2/3 K L-1. K.4 L-.6.
There is no difference between the law of diminishing marginal returns and the law of diminishing marginal rate of technical substitution.
Florida citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are turning to $100,000 to $300,000 mechanical harvesting machines known as “trunk, shake, and catch” pickers, which vigorously shake oranges from the trees. If widely adopted, how will this substitution affect the demand for human orange pickers? What does that imply about the relative strengths of the substitution and output effects?
Which statement best explains how the substitution effect impacts labor as a factor of production? Scarcity of a reliable workforce leads to increased rates of unemployment. Falling salaries cause a large staff turnover and hostile working environment. Increased wage demands may lead to worker layoffs in favor of machinery. Inexperience workers are more likely to receive professional training.
Define marginal rate of substitution.
The marginal rate of technical substitution of L=2K means that the firm can substitute 2 units of capital for an additional 1 unit of labor in the market. True or false.
b) There are two firms in the economy. Each firm employs positive amounts of capital and labour. The technology satisfies diminishing marginal rate of technical substitution of labour for capital. Currently, A’s marginal rate of technical substitution of labour for capital is 4 while B’s marginal rate of technical substitution of labour for capital is 2. Is the current production of the two firms efficient? If not, describe an exchange of inputs that would improve efficiency. Can these production levels of the two firms be observed in a perfectly competitive equilibrium of a production and exchange economy? Explain c) State the first theorem of welfare economics of a production and exchange economy. Which conditions must be satisfied for the Pareto efficiency of an allocation of a production and exchange economy (assuming that all goods are used, produced and consumed in strictly positive quantities)? Discuss and explain