Question #11982

Given the Production function:

Q=100+P-0.01P2+2N-0.03N2

Determine the marginal rate of technical substitution.

Q=100+P-0.01P2+2N-0.03N2

Determine the marginal rate of technical substitution.

Expert's answer

Marginal Rate of Technical Substitution is the amount by which the quantity of

one input (n) has to be reduced when one extra unit of another input (n2) is

used, so that the total output (q) remains constant:

Dn/DN2 =

MP(N2)/MP(N) = -0.03/2= -0.015 – MRTS for the input N for N2

one input (n) has to be reduced when one extra unit of another input (n2) is

used, so that the total output (q) remains constant:

Dn/DN2 =

MP(N2)/MP(N) = -0.03/2= -0.015 – MRTS for the input N for N2

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