Consider an economy that produces two goods: food, x, and clothing, y. Production of both goods is

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Consider an economy that produces two goods: food, x, and clothing, y. Production of both goods is characterized by constant returns to scale. Given current input prices, the marginal cost of producing clothing is $10 per unit, while the marginal cost of producing food is $20 per unit. What is the marginal rate of transformation of x for y? How much clothing must the economy give up in order to get one additional unit of food?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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