Answer:
0.25
Explanation:
The marginal rate of technical substitution (MRTS) can be described as the rate of a reduction is one factor to maintain the same production level when another factor is increased.
Given that labor is measured on the horizontal axis, the MRST of K for L can be calculated as follows:
[tex]MRST_{KL} = \frac{MP_{K} }{MP_{L} }[/tex]
Where;
MPK = Marginal product of capital = 2
MPL = Marginal product of labor = 8
Substituting the values into the equation, we have:
[tex]MRST_{KL} = \frac{2}{8} =\frac{1}{4} = 0.25[/tex]
This implies that 0.25 of capital must be given up to have one unit of labor.
