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Exercises · Q8
Q.

The following combinations of labour and capital lie on a single isoquant, all producing the same fixed level of output. Compute the Marginal Rate of Technical Substitution between each successive pair.

CombinationLabour (LL)Capital (KK)
A120
B214
C39
D45
E52
Puducherry TnboardTextbookSubjectiveImportance★★★★★
8% · 3/39 Questions
✓ Free question

MRTSLK=−ΔKΔLMRTS_{LK}=-\dfrac{\Delta K}{\Delta L}, computed between each consecutive pair (each step has ΔL=1\Delta L=1):

A to B: ΔK=14−20=−6\Delta K = 14-20=-6. MRTSLK=−−61=6MRTS_{LK}=-\dfrac{-6}{1}=6

B to C: ΔK=9−14=−5\Delta K = 9-14=-5. MRTSLK=−−51=5MRTS_{LK}=-\dfrac{-5}{1}=5

C to D: ΔK=5−9=−4\Delta K = 5-9=-4. MRTSLK=−−41=4MRTS_{LK}=-\dfrac{-4}{1}=4

D to E: ΔK=2−5=−3\Delta K = 2-5=-3. MRTSLK=−−31=3MRTS_{LK}=-\dfrac{-3}{1}=3

The MRTS falls steadily — 6,5,4,36,5,4,3 — confirming that this isoquant is convex to the origin, and that each additional unit of labour substitutes for progressively LESS capital than the unit before it, exactly as the Law of Diminishing Marginal Rate of Technical Substitution predicts.

✓Final answer

MRTSLKMRTS_{LK}: 66 (A→B), 55 (B→C), 44 (C→D), 33 (D→E) — a steadily diminishing rate.

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