00:01
Hi, so we're carefully explaining the difference between marginal rate of substitution and marginal rate of transformation.
00:05
Be sure to explain the economic community of each terms.
00:07
What value does each of them take? so the marginal rate of substitution is the amount of a good that a consumer is willing to consume compared to another good as long as the new one is equally satisfying.
00:19
And the marginal rate of transformation is the rate of transformation of one unit, one unit change to produce.
00:35
New goods.
00:50
All right, that makes sense.
00:51
So basically, substitution is about comparing to things, like i drink coke instead of pepsi, that kind of thing.
01:00
Like, that's what substitution is.
01:02
I'm substituting my consumption of pepsi for coke.
01:06
That's what that is.
01:08
So, but transformation is, like, i am using a good to make another good.
01:18
For example, like, i use aluminum to make a coke can...