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Diminishing Marginal Rate of Technical Substitution | zea tutor | Economics |
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Law of Diminishing Maginal Rate of Technical Substitution
Law of Diminishing Maginal Rate of Technical Substitution
Each & every firm wishes to produce goods in maximum quantity but at the lower rate of cost within its limited resources available. For this purpose, it tries to substitute one factor for others but the rate of exchange will consecutively decrease as it does so. This act of a firm to substitute the number of units of factors of production is known as the law of diminishing marginal rate of technical rate of substitution.
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