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Worked Examples · Example 3
Q.

The following combinations of labour and capital all produce exactly 100 units of output (an isoquant). Compute the Marginal Rate of Technical Substitution (MRTSLKMRTS_{LK}) between each successive pair of combinations, and comment on the trend.

CombinationLabour (LL)Capital (KK)
A112
B28
C35
D43
E52
Tamil Nadu DgeTextbookSubjectiveImportance★★★★★
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MRTSLK=−ΔKΔLMRTS_{LK}=-\dfrac{\Delta K}{\Delta L} is computed between each consecutive pair of combinations, all lying on the SAME isoquant (output fixed at 100 units):

A to B: ΔL=2−1=1\Delta L = 2-1=1, ΔK=8−12=−4\Delta K = 8-12=-4. MRTSLK=−−41=4MRTS_{LK}=-\dfrac{-4}{1}=4

B to C: ΔL=3−2=1\Delta L = 3-2=1, ΔK=5−8=−3\Delta K = 5-8=-3. MRTSLK=−−31=3MRTS_{LK}=-\dfrac{-3}{1}=3

C to D: ΔL=4−3=1\Delta L = 4-3=1, ΔK=3−5=−2\Delta K = 3-5=-2. MRTSLK=−−21=2MRTS_{LK}=-\dfrac{-2}{1}=2

D to E: ΔL=5−4=1\Delta L = 5-4=1, ΔK=2−3=−1\Delta K = 2-3=-1. MRTSLK=−−11=1MRTS_{LK}=-\dfrac{-1}{1}=1 …

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