Precision of the Marginal Rate of Transformation
Imagine an economic model where the trade-off between consumption (c) and free time (t) is represented by a curved feasible frontier, described by a function c = g(t). A colleague suggests that to find the rate of transformation at a specific amount of free time, one could simply pick a nearby second point on the curve and calculate the slope of the line connecting the two points. Critique this approach. In your response, explain why using the derivative of the function g(t) provides a more precise measure of the trade-off at that single, specific point.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
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Precision of the Marginal Rate of Transformation
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