The marginal rate of transformation where goods X and Y are produced by an economy using capital and labor as inputs equals:
A) $X / Y$.
B) $w / r$, where $w$ is the wage and $r$ is the rental rate of capital.
C) $M P _ { L } / M P _ { K }$, where $L$ stands for labor and $K$ stands for capital.
D) $M C X / M C y$

Question

The marginal rate of transformation where goods X and Y are produced by an economy using capital and labor as inputs equals: 
A) $X / Y$.
B) $w / r$, where $w$ is the wage and $r$ is the rental rate of capital.
C) $M P _ { L } / M P _ { K }$, where $L$ stands for labor and $K$ stands for capital.
D) $M C X / M C y$

Quizplus · Accepted Answer

The marginal rate of transformation (MRT) is the rate at which one good can be substituted for another while keeping the production level constant. It is equal to the ratio of the marginal costs (MC) of producing the two goods, hence $MC_X / MC_Y$.

The Marginal Rate of Transformation Where Goods X and Y X/YX / YX/Y

The Marginal Rate of Transformation Where Goods X and Y $X / Y$