The production function of a firm is, f ( x 1 , x 2 ) = 27 x 1 + 3 x 2, where x 1 is input 1 and x 2 is input 2. Calculate the Technical Rate of Substitution when x 1 = 2 and x 2 = 3.
Production function = 27x1 + 3x2
Technical Rate of Substitution = dx1 / dx2
= 27/3
= 9
So the Technical Rate of Substitution is 9 constant for any value of x1 and x2
So, Technical Rate of Substitution when x 1 = 2 and x 2 = 3 is 9.