Marginal rate of transformation

From SKAIPedia
Jump to navigation Jump to search

The marginal rate of transformation is the amount by which one output can be increased if another is reduced by a small amount, per unit of the decrease, holding total inputs constant. The marginal rate of transformation for good X in inputs K and L equals the ratio of the first partial derivative of the production function of X to K over the first partial derivative of the production function of X to L. More succinctly, the marginal rate of transformation is the ratio of marginal products.