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What is Marginal Rate of Transformation ? Explain with help of an example. |
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Answer» Solution :MRT is the RATE at which the unis of one good have to be sacrificed to produce one more UNIT of the other good in a twe good in a two goods ECONOMY. Suppose an economy produces only two goods X and Y. Further suppose that by EMPLOYING these resources fully and efficiently, the economy 1X + 10Y. If the economy decides to produce 2X it has to cut down production of Y by 2 UNITS. Then 2T is the oportunity 1X. Then 2Y:1X is the MRT. |
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