Business: Marginal Rate of Substitution Given a Cobb-Douglas production relation gi...

Business: Marginal Rate of Substitution Given a Cobb-Douglas production relation

giving the total production P from L units of labor and K units of capital, along any isoquant (that is, for a fixed production level), may be found by implicit differentiation. The absolute value of this derivative is called the marginal rate of technical substitution of labor for capital and is denoted MRTS.