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What is the difference between marginal rate of substitution and marginal rate of technical substitution?
Wiki User
∙ 14y ago
marginal rate of substitution is the slope of the indifference curve. It is the rate at which the consumer is willing to give up certain units of a good in order to get an additional unit of another good. it is equal to the ration of the Marginal Utilities of the 2 goods.
marginal rate of transformation is the slope of the production possibiltiy frontier. it is the rate at which the producer is willing to give up the production of certain units of a good in order to increase the prpduction of the other good by 1 unit ( by shifting the inputs more towards the production of the last good). it is equal to the ratio of the marginal costs of the 2 goods.
Wiki User
∙ 12y ago
Wiki User
∙ 11y agoMarginal rate of substitution is the unit of good a consumer is willing to give up to get more of another good while remaining equally satisfied.
Marginal utility is the additional satisfaction a consumer gets by consuming one more of the good
Wiki User
∙ 14y agoTechnically speaking, there is no difference. It is just that MRTS is a specific name to refer to the trade-off between factors of production, usually labour and capital.
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