Question : Statement 1: The marginal rate of transformation (MRT) indicates the opportunity cost of producing one more unit of a good in terms of the other good.

Statement 2: The MRT is constant along the PPC, assuming a linear production possibilities curve.

Question : Statement 1: Consumer equilibrium can occur when the marginal rate of substitution is equal to the relative price of goods.

Statement 2: The marginal rate of substitution measures the rate at which a consumer is willing to substitute one good for another while

Question : Statement 1: The production possibilities curve (PPC) represents the maximum combination of goods that can be produced in an economy.

Statement 2: Points inside the PPC represent efficient resource allocation.

Question : Statement 1: Cross elasticity of demand measures the responsiveness of quantity demanded of one good to changes in the price of another good.

Statement 2: Positive cross elasticity of demand indicates that two goods are substitutes.

Question : Statement 1: The PPC illustrates the concept of opportunity cost.

Statement 2: As an economy produces more of one good, the opportunity cost of producing those goods decreases.