Question : Assertion: The marginal rate of transformation (MRT) measures the opportunity cost of producing one additional unit of a good.
Reason: MRT reflects the production possibilities curve (PPC) slope and shows the trade-off between two goods.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
The assertion is true. The MRT represents the rate at which one good must be sacrificed to produce an additional unit of another good while keeping overall production constant. It reflects the opportunity cost of allocating resources from the production of one good to the production of another.
The reason provided is a correct explanation of the assertion. The production possibilities curve represents the maximum output combinations of two goods that can be produced given a fixed set of resources and technology. The slope of the PPC represents the MRT and reflects the trade-off between the two goods. As more of one good is produced, resources must be shifted away from the production of the other good, resulting in an increasing MRT.
Therefore, the correct answer is Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
