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12 September, 19:07

The marginal product of labor in the production of computer chips is 3030 chips per hour. The marginal rate of technical substitution (MRTS ) of hours of labor for hours of machine capital is 0.200.20. What is the marginal product of capital?

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  1. 12 September, 19:13
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    150

    Explanation:

    As we know that

    The marginal rate of technical substitution (MRTS) = Marginal product of labor : Marginal product of capital

    where,

    The marginal rate of technical substitution (MRTS) = 0.20

    And, the marginal product of labor is 30 chips per hour

    So, the marginal product of capital is

    = 30 chips per hour : 0.20

    = 150

    The marginal rate of technical substitution (MRTS ) shows a relationship between the marginal product of labor and the marginal product of capital
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