Question
Download Solution PDFWhen labour is plotted on X-axis and capital is plotted on Y-axis and an iso-quant is prepared, then which of the following statements is/are false ?
(a) Marginal rate of technical substitution of labour for capital is equal to the slope of the iso-quant.
(b) Marginal rate of technical substitution of labour for capital is equal to change in the units of capital divided by the change in the units of labour.
(c) Marginal rate of technical substitution of labour for capital is the ratio of marginal productivity of capital to marginal productivity of labour.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe marginal rate of technical substitution:
- The marginal rate of technical substitution (MRTS) is an economic theory that illustrates the rate at which one factor must decrease so that the same level of productivity can be maintained when another factor is increased.
- The marginal rate of technical substitution shows the rate at which you can substitute one input, such as labor, for another input, such as capital, without changing the level of resulting output.
- The MRTS is equal to the slope of isoquants.
- The marginal rate of technical substitution of labor for capital is equal to change in the units of capital divided by the change in the units of labor.
- MRTS = - ΔK / ΔL , Where K = Capital and L = Labor.
- The marginal rate of technical substitution of labor for capital is the ratio of marginal productivity of labor to the marginal productivity of capital.
- MRTS = MPL / MPK .
Thus, statement C is incorrect.
Last updated on Jun 6, 2025
-> The UGC NET Exam Schedule 2025 for June has been released on its official website.
-> The UGC NET Application Correction Window 2025 is available from 14th May to 15th May 2025.
-> The UGC NET 2025 online application form submission closed on 12th May 2025.
-> The June 2025 Exam will be conducted from 21st June to 30th June 2025
-> The UGC-NET exam takes place for 85 subjects, to determine the eligibility for 'Junior Research Fellowship’ and ‘Assistant Professor’ posts, as well as for PhD. admissions.
-> The exam is conducted bi-annually - in June and December cycles.
-> The exam comprises two papers - Paper I and Paper II. Paper I consists of 50 questions and Paper II consists of 100 questions.
-> The candidates who are preparing for the exam can check the UGC NET Previous Year Papers and UGC NET Test Series to boost their preparations.