Efficiency in Production

3 years ago
Microeconomics

Technical efficiency – Condition under which firms combine inputs to produce a given output as inexpesively as possible.

Marginal rate of technical substitution of labor for capital: MRTSLK = w/r

 Production possibilities frontier – Curve showing the combinations of two goods that can be produced with fixed quantities of inputs.

Marginal rate of transformation – Amount of one good that must be given up to produce one additional unit of a second good.

MRT = MCX/MCY = MRS = PX/PY

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Bijay Satyal
Bijay Satyal
Dec 1, 2021
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