The financial encyclopedia uses cookies to improve your user experience. Find out more here!


       

 

Marginal rate of transformation
 

 

The amount by which one output can be increased if another is reduced by a small amount, per unit of the decrease, holding total inputs constant. The marginal rate of transformation can be calculated at the level of the firm, the industry, a country, or the world as a whole. It measures opportunity costs, and is given by the gradient of the production possibility frontier.

 

Reference: Oxford Press Dictonary of Economics, 5th edt.