Question

When we say rate of product transformation we refers to ______.

• A. how production of one good can be substituted for another while still using a fixed supply of inputs efficiently
• B. rate of input substitution for maintaining the same production level
• C. ratio of price of final products
• D. input/output ratio of each product

Answer 1

The correct option is A how production of one good can be substituted for another while still using a fixed supply of inputs efficiently

The rate of production at which one product is substituted for another product while still keeping using a fixed supply of inputs efficiently is called the rate of Product Transformation. It is the ratio of units of a commodity sacrificed to gain an additional unit of another commodity. This is equal to the units sacrificed divided by units gained.