Question

opportunity cost; marginal rate of transformation (MRT); relative commodity prices.

Answer 1

Answer:Opportunity cost is the profit lost when one commodity is selected over another. The idea of opportunity cost was first begun by John stuart mill. The marginal rate of transformation (MRT) is the number of units or amounts or a good that must be forgone in order to create or attain one unit of another good.Relative prices is the price of the commodity such as a good or services in terms of another. In other words, It is the ratio if two prices.

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Answer 2

The answer is stated below:

Explanation:

• Opportunity cost is the idea which is begun by John Stuart Mill, it is defined as the value of the next best thing which the person is ready to give up whenever the person take a decision.

• For example, the person have $100,000 and he choose to invest in the product line which will generate return of 5%.

• MRT stands for Marginal rate of transformation, it is defined as the number of units of the goods which need to be forgone so that create or achieve one more unit of another good.

• In short, it is the rate at which the one service or good is transformed into another. For example, In the factory, the number of units of good Y which will be forgone so that could produce extra unit of good Z.

• Relative commodity prices, it is defined as the relative price of the commodity like the service or good in terms of another, that is the ratio of the two prices.

• In short, it is defined as the ratio of the prices. For example, if the price of gasoline is $0.15 per gallon and the wage rate is $1.15 per hour, then the relative price of gasoline will be 0.13 ($0.15/ $1.15) hours of labor per gallon.

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