The marginal rate of transformation is

Question

Quizplus · Accepted Answer

The marginal rate of transformation (MRT) is the rate at which one good must be sacrificed to produce a unit of another good, while holding constant the production of the other good. It is equal to the slope of the production possibility frontier (PPF). Therefore, option B is the correct answer. Option A is incorrect as it refers to the conversion of one factor of production (labor) into another (capital), rather than the tradeoff between producing two goods. Option C is incorrect as it refers to the rate at which consumers are willing to substitute one good for another. Option D is incorrect as it refers to the additional output produced by an additional unit of input, rather than the tradeoff between producing two goods. Option E is incorrect as it does not reflect the MRT but rather the cost of labor for firms.

The Marginal Rate of Transformation Is