Question

What is ‘Marginal Rate of Transformation’? Explain with the help of an example.

Answer 1

The Marginal Rate of Transformation (MRT) is the quantity of one good that must be sacrificed to produce an additional unit of another good; it is measured by the slope of the PPC. For example, if producing one additional unit of butter requires sacrificing two units of guns, the MRT is two guns for one unit of butter.