Question

Define and then derive the expression for the MRTS. How do you derive this? I thought derive meant to receive or take something.
Thanks.

Answer 1

MRTS is the marginal rate of technical substitution. In a two-input production function, it is simply the marginal product of X over the marginal product of Y. That is MRTS = -MPx/MPy and MPx is simply the first derivitive of the production function with respect to x

Answer 2

Thanks.

Answer 3

When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average total cost of production when the firm hires 7 workers?