Marginal rate of technical substitution,
Definition of Marginal rate of technical substitution:
The degree to which a producer is technically able to convert a small amount of one input (such as capital) to another input (e.g., labor) (without affecting the quality of production).
Marginal Technical Substitution Rate (MRTS) is an economic theory that describes the rate at which one factor must be reduced to maintain the same level of productivity as other factors increase.
MRTS reflects the capabilities and influence of factors such as capital and labor that allow the company to maintain sustainable production. MRTS differs from the mediocre replacement rate (MRS) in that MRTS focuses on user balance manufacturer and MRS balance.
How to use Marginal rate of technical substitution in a sentence?
- The modest rate of technical substitution indicates the rate at which an input, such as labor, can be converted from another input, such as capital, without changing the level of production.
- In Ariham, both isoconts or curves show all the different combinations of inputs that produce the same product.
Meaning of Marginal rate of technical substitution & Marginal rate of technical substitution Definition