Marginal Rate of Technical Substitution

The marginal rate of technical substitution (MRTS) tells how much capital is needed to replace a bit of labor. $$MRTS = - \frac{MP_L\left( K, L\right)}{MP_K \left( K, L \right)}$$

Example

The cookie factory's production function is `q \left( c, s \right) = K L^2`. The marginal rate of technical substitution is

$$ MRTS = - \frac{MP_L\left( K, L\right)}{MP_K \left( K, L \right)} = - \frac{2 K L}{L^2} = -\frac{2 K}{L} $$

Question

The production function is `q (K, L) = K^{93} L^{9}`.

Calculate the marginal rate of technical substitution in function of K and L.

The marginal product of labor is $$ MP_L = \frac{dq(K, L)}{dL} = 9 K^{93} L^{9 - 1} = 9 K^{93} L^{8} $$ The marginal product of capital is $$ MP_K = \frac{dq(K,L)}{dK} = 93 K^{93 - 1} L^{9} = 93 K^{92} L^{9} $$ Therefore, the marginal rate of technical substitution is $$ MRTS = - \frac{MP_L}{MP_K} = - \frac{9 K^93 L^{8}}{93 K^92 L^9} = - \frac{9 K}{93 L} $$