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The rate at which one product can be altered into the other with the given set of resources is called the marginal rate of transformation.
Economists study it with a marginal rate of substitution for product investments where they try to establish the commodity substitution bias to see how products compare where they try producing one unit of X less and 3 units of Y more.
For example - if the total value could be maintained by increasing the consumption of Y by 2 units of X then the MRS = 1X: 2Y. Such a gain in total value could be achieved by shifting resources from the production of Y to X. The condition when both MRT and MRS are equal there is no gain.
Where MRT = MPs divided by MPx (or the Marginal Costs /Marginal Costy),
Given that: Marginal Costi = Wage rate /MPi
It is the rate at which the units of one category of goods should be forfeited to manufacture more units of others if it is assumed that there are two goods in the economy.
The difference in the manufacturing procedure of two goods made from diverse variables and technology gives the opportunity cost of producing the good. It takes into account the measure of extent, free time, and grade points to get practicable results.
Such applications can be seen in the healthcare industry where the organization may detect the relation between two methods of producing healthcare devices or drugs to gain total production of value.
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