Hartley function: Difference between revisions

Revision as of 05:37, 15 March 2013

In economic theory, the Marginal Rate of Technical Substitution (MRTS)—or Technical Rate of Substitution (TRS)—is the amount by which the quantity of one input has to be reduced ( $-\Delta x_{2}$ ) when one extra unit of another input is used ( $\Delta x_{1}=1$ ), so that output remains constant ( $y={\bar {y}}$ ).

$MRTS(x_{1},x_{2})=-{\frac {\Delta x_{2}}{\Delta x_{1}}}={\frac {MP_{1}}{MP_{2}}}$

where $MP_{1}$ and $MP_{2}$ are the marginal products of input 1 and input 2, respectively, and $MRTS(x_{1},x_{2})$ is Marginal Rate of Technical Substitution of the input $x_{1}$ for $x_{2}$ .

Along an isoquant, the MRTS shows the rate at which one input (e.g. capital or labor) may be substituted for another, while maintaining the same level of output. The MRTS can also be seen as the slope of an isoquant at the point in question.

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+In [[economic]] theory, the '''Marginal Rate of Technical Substitution''' ('''MRTS''')—or '''Technical Rate of Substitution''' ('''TRS''')—is the amount by which the quantity of one input has to be reduced (<math>-\Delta x_2</math>) when one extra unit of another input is used (<math>\Delta x_1 = 1</math>), so that output remains constant (<math>y = \bar{y}</math>).
+<math>MRTS(x_1,x_2) =-\frac{\Delta x_2}{\Delta x_1} = \frac{MP_1}{MP_2}</math>
+where <math>MP_1</math> and <math>MP_2</math> are the [[marginal product]]s of input 1 and input 2, respectively, and <math>MRTS(x_1,x_2)</math> is '''Marginal Rate of Technical Substitution''' of the input <math>x_1</math> for <math>x_2</math>.
+Along an isoquant, the MRTS shows the rate at which one input (e.g. capital or labor) may be substituted for another, while maintaining the same level of output. The MRTS can also be seen as the slope of an [[isoquant]] at the point in question.
+==See also==
+*[[Marginal rate of substitution]] (the same concept on consumption side)
+==References==
+*{{cite book |authorlink=Andreu Mas-Colell |last=Mas-Colell |first=Andreu |last2=Whinston |first2=Michael |last3=Green |first3=Jerry |year=1995 |title=Microeconomic Theory |location=Oxford |publisher=Oxford University Press |isbn=0-19-507340-1 }}
+{{DEFAULTSORT:Marginal Rate Of Technical Substitution}}
+[[Category:Microeconomics]]
+[[Category:Production economics]]
+{{microeconomics-stub}}
+[[de:Grenzrate der Substitution#Grenzrate der Faktorsubstitution]]

Hartley function: Difference between revisions

Revision as of 05:37, 15 March 2013

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