The marginal rate of transformation measures the:
A)absolute cost of producing a commodity.
B)relative price of labor.
C)opportunity cost of one good in terms of the other.
D)rate at which one input is substituted for the other.

Question

Quizplus · Accepted Answer

The marginal rate of transformation (MRT) measures the amount of one good that must be forgone to produce an additional unit of another good. In other words, it measures the opportunity cost of producing one good in terms of the other. Therefore, the correct answer is C, which states that the MRT measures the opportunity cost of one good in terms of the other. The other options are not correct because they do not correctly describe what the MRT measures.

The Marginal Rate of Transformation Measures The