Question: Suppose there are two goods, video cassettes and record albums, produced by firm A and firm B. Suppose the marginal rate of product transformation (RPT) of record albums for video cassettes in firm B is 2 (That is, firm B can always trade 2 video cassettes for 1 record album in production). On the other hand, the RPT in firm A is 1. Assume that each firm's RPT is constant over all possible output combinations.
If firm A produces 100 record albums and 100 video cassettes, how might firm A be made better off by shifting its output mix?