ELASTICITY OF SUBSTITUTION TEX: A measure of how easy is it for a firm to 4it: 0= Percentage change in capital-labor ratio Percentage change in MRTSL,K . /T: how the capital-labor ratio, K/ #With: K/L at./ = slope of ray 0.1 = 4 20 MIRTS, at 1 =4 KL. al B = slope of ray OB =1 MRTS, Kat B = 1 20 - . . .. . K, machine-hours per month B MRSB- - 10 Q =1 million 5 10 L, man-hours per month