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26 August, 23:29

A consumer has $130 in monthly income to be spent on two goods Z and B. The price of good Z (Pz ) is $8.00. The Marginal Rate of Transformation (MRT) is equal to minus-2. That is 2 units of good B can be traded for 1 unit of good Z. What is the price of good B in $?

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  1. 27 August, 00:47
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    Price of B is $4

    Explanation:

    Marginal rate of transformation is defined as the amount of a good x has to stop being produced inorder to produce a certain amount of a good y. Factors of production and technology used are assumed to be constant.

    In this scenario the marginal rate of transformation is - 2, that is 2 units of good B can be traded for 1 unit of good Z, mathematically

    2 * Pb = Pz

    Substitute price of Z

    2 * Pb = $8

    Pb = 8 : 2

    On = $4
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Home » Business » A consumer has $130 in monthly income to be spent on two goods Z and B. The price of good Z (Pz ) is $8.00. The Marginal Rate of Transformation (MRT) is equal to minus-2. That is 2 units of good B can be traded for 1 unit of good Z.
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