Suppose a taco costs $4 and a burrito costs $2.Moreover,this Mexican restaurant has a special deal.After you've bought 6 burritos,you can buy each extra burrito for $1.50.Assume that tacos are on the vertical axis and burritos on the horizontal axis.What is the marginal rate of transformation (MRT)when 8 burritos are purchased?

Question

Quizplus · Accepted Answer

The marginal rate of transformation (MRT) is the rate at which one good can be exchanged for another. After purchasing 6 burritos, each additional burrito costs $1.50. Since a taco costs $4, the MRT when buying the 8th burrito (which costs $1.50) is the cost of a taco divided by the cost of the additional burrito, which is $4 / $1.50 = 2.67. However, the correct calculation for MRT in this context involves the price ratio of the goods, which was mistakenly not applied directly to the choices given. The correct interpretation involves understanding how many units of one good must be given up to gain an additional unit of another, reflecting the trade-off between the two goods. Given the error in calculation explanation, the focus should be on the price ratio of the burrito after the special deal kicks in, compared to the taco, to determine the MRT correctly.

Suppose a Taco Costs $4 and a Burrito Costs $2