In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150.
a. If the economy wanted to produce two more laptops, what would happen to the production of smart phones?
b. What is the marginal rate of transformation from smart phones to laptops? Interpret your answer.
c. The marginal rate of substitution of smart phones for laptops is 1/2. Is this economy achieving output efficiency?

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The Answer of In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150.
a. If the economy wanted to produce two more laptops, what would happen to the production of smart phones?
b. What is the marginal rate of transformation from smart phones to laptops? Interpret your answer.
c. The marginal rate of substitution of smart phones for laptops is 1/2. Is this economy achieving output efficiency?

In a Small Economy That Produces Smart Phones and Laptops