The marginal rate of technical substitution

A. Determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output
B. Is the absolute value of the slope of the isoquant
C. Is the absolute value of marginal revenue
D. Is constant along the isoquant curve

Do a little research, and then take a shot. What do you think?

Hint: read up on isoquant curves.

The marginal rate of technical substitution (MRTS) is a concept used in economics to measure the rate at which a producer can substitute between two inputs in order to increase one additional unit of output.

To find the correct answer to this question, we need to understand what the MRTS represents and how it is calculated.

The MRTS is the ratio of the marginal product of one input to the marginal product of another input. It measures the amount by which the quantity of one input can be reduced for every additional unit of the other input, while keeping the level of output constant.

Option A says that the MRTS determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output. This is correct as it aligns with the definition of MRTS.

Option B states that the MRTS is the absolute value of the slope of the isoquant. An isoquant is a curve that shows all combinations of inputs that produce the same level of output. While the slope of the isoquant provides information about the rate of substitution between inputs, it does not directly represent the MRTS.

Option C suggests that the MRTS is the absolute value of marginal revenue. Marginal revenue refers to the change in total revenue resulting from the sale of one additional unit of output. It is not directly related to the concept of MRTS.

Option D claims that the MRTS is constant along the isoquant curve. This is not accurate because the MRTS can vary at different points along the curve depending on the diminishing marginal returns of inputs.

Therefore, the correct answer is A. The MRTS determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output.