I taught Economics a long time ago so don’t give me to much credit, but I would say that the marginal rate of transformation is the slope of the line that says how much you can PRODUCE of one good or another as a producer, and thus it has to do with isoquants, not indifference curves. This straight line here is only the price ratio px/py and tells you how much you can CONSUME of each good. The slope of the indifference curve is called “the marginal rate of substitution”. Again, I may be wrong. Post script. That’s a minor thing in any case, this is a great video and I thank you for it.
Agree, marginal rate of transformation sounds more related to production to me. The textbook I use on my course (Perloff) is the only book that calls -px/py the MRT, so I use it for my students. Before this, I always called -px/py the marginal rate of exchange (the rate at which one can exchange one good for another in the market).
@@drcraigwebb Thank you. The math part is very nice. I only saw it once and got part of it but I plan to see the video a couple more times. TH-cam is such an incredible source of knowledge!
While looking at tne Lagrangian in Economics I came across, of course, constrained optimization to get to the optimal use of two factors, capital and labor, and the curves are isoquants. There the line is indeed an isocost and its slope is the MR of transformation. So it is used in production and also y consumption optimization.
While this video was more complex than what I was searching for, I did appreciate its approachable presentation despite the added depth.
I taught Economics a long time ago so don’t give me to much credit, but I would say that the marginal rate of transformation is the slope of the line that says how much you can PRODUCE of one good or another as a producer, and thus it has to do with isoquants, not indifference curves. This straight line here is only the price ratio px/py and tells you how much you can CONSUME of each good. The slope of the indifference curve is called “the marginal rate of substitution”. Again, I may be wrong. Post script. That’s a minor thing in any case, this is a great video and I thank you for it.
Agree, marginal rate of transformation sounds more related to production to me. The textbook I use on my course (Perloff) is the only book that calls -px/py the MRT, so I use it for my students. Before this, I always called -px/py the marginal rate of exchange (the rate at which one can exchange one good for another in the market).
@@drcraigwebb Thank you. The math part is very nice. I only saw it once and got part of it but I plan to see the video a couple more times. TH-cam is such an incredible source of knowledge!
This is like 3Blue1Brown for Microeconomics haha. Great video and very underrated!
Love it :) Exactly what I was going for (ripping off 3B1B). That guy is amazing.
Exactly my thoughts when he said “if you had to reinvent it”.
Amazing explanation that I was looking for so long! Thank you, sir
underrated channel
While looking at tne Lagrangian in Economics I came across, of course, constrained optimization to get to the optimal use of two factors, capital and labor, and the curves are isoquants. There the line is indeed an isocost and its slope is the MR of transformation. So it is used in production and also y consumption optimization.