The marginal product of labor in the production of computer chips is 50 chips per hour. The marginal rate of technical substitution of hours of labor for hours of machine-capital is 1/4. What is the marginal product of capital?

1. CHAPTER 6
QUESTION 2
MRTS, MPK, MPL

2. Question No. 2
The marginal product of labor in the production of computer
chips is 50 chips per hour. The marginal rate of technical
substitution of hours of labor for hours of machine-capital
is 1/4.
What is the marginal product of capital?

3. Key Points
Formula.
MRTS(L, K) = MPL/MPK
where:
K = Capital
L = Labor
MP = Marginal products of
each input
MRTS= Marginal Rate of
Technical Substitution
Definition.
The marginal rate of technical
substitution is defined as the
ratio of the two marginal
products.
Solution.
To determine the marginal
product of capital, we substitute
the given values into the
formula.

4. Solution
Therefore:
• MRTS(L, K) = MPL/MPK
¼ = 50/MPK
200 = MPK

5. THANK YOU!

6. Chart
• The chart shows that when a
firm moves down from point
(a) to point (b) and it uses one
additional unit of labor, the
firm gives up 4 units of capital
(K) and yet remains on the
same isoquant at point.
Formula.
MRTS(L, K) = MPL/MPK or ΔL/ΔK