Given below is a production possibility schedule showing different quantities of two commodities – Cars and Computers which can be produced in an economy.

What is the Marginal rate of Transformation in the above production possibility schedule when we shift from point C to Point D?

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Marginal Rate of Transformation is the slope of Production Possibility Curve. That is, amount of commodity sacrificed (cars in the given case), in order to produce an additional unit of another commodity (computers in the given case).

To calculate the Marginal Rate of Transformation (MRT) when shifting from point C to point D, we use the formula:

MRT = (Change in Computers) / (Change in Cars)

At point C, the economy produces 120 cars and 30 computers. At point D, the economy produces 90 cars and 40 computers.

Change in Cars = 90 - 120 = 30 (a decrease of 30 cars)

Change in Computers = 40 - 30 = 10 (an increase of 10 computers)

MRT = 30 / 10 = 3