The table shows some combinations of corn and cotton that an economy can produce when its resources are fully utilised:
| Possibility | A | B | C | D | E |
|---|---|---|---|---|---|
| Corn (units) | 0 | 1 | 2 | 3 | 4 |
| Cotton (units) | 10 | 9 | 7 | 4 | 0 |
Between which two possibilities is the marginal rate of transformation, that is, the units of cotton given up for one more unit of corn, the highest?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → D and E
The marginal rate of transformation here is the cotton given up for one more unit of corn.
Cotton given up for each extra unit of corn:
A to B: 10 − 9 = 1 unit of cotton
B to C: 9 − 7 = 2 units of cotton
C to D: 7 − 4 = 3 units of cotton
D to E: 4 − 0 = 4 units of cotton
The cotton given up rises with each extra unit of corn, so it is highest between D and E.
Note: The term ‘marginal rate of transformation’ is not in the NCERT book (2026-27), but NTA asks questions on it, so such questions are included here. It is the amount of one good given up to produce one more unit of the other, the opportunity cost read off the frontier.
NCERT (2026-27): “Production Possibility Frontier If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.” |