Author Question: If the marginal rate of transformation is constant what can be said of the shape of the production ... (Read 27 times)

berenicecastro · **on:** Jun 29, 2018

If the marginal rate of transformation is constant what can be said of the shape of the production possibilities frontier and why?

What will be an ideal response?

Question 2

If the firm in the figure above is unregulated, it will make an economic profit of

A) zero.
B) -240.
C) 100.
D) 400.

shoemake · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The marginal rate of transformation is the slope of the production possibility frontier. It is the ratio of the change in the good (or service) on the y-axis to the change in the good (or service) on the x-axis. If it is constant that means that the production possibilities frontier is a straight line. This is true because it would mean that the slope of the production possibilities frontier is the same throughout which of course is precisely one of the properties of a straight line.

Answer to Question 2

C