Re: Please help with this Production Technology question!

Posted by Nupur on May 13, 2014; 5:06pm
URL: http://discussion-forum.276.s1.nabble.com/Please-help-with-this-Production-Technology-question-tp7589575p7589598.html

Yeah I know that!  But I'm asking Diminishing Technical Rate of Substitution (TRS) and not diminishing returns to scale. Returns to scale is when you scale all the factors by some positive constant 't' but Technical Rate of Substitution means when you increase x1 input by one unit then by how much x2 will decrease to be on the same isoquant. Am I right? If it is so then after we've calculated TRS (=(-)MP of x1/MP of x2) and we take d/dx1(TRS) then according to me it comes positive but then it can't be diminishing TRS. I hope I'm making some sense??