Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese. The price of one pound of cheese is $6, and the price of a bottle of wine is $10 . The consumer should increase his consumption of
a. cheese, decrease his consumption of wine, and move to a lower indifference curve.
b. cheese, decrease his consumption of wine, and move to a higher indifference curve.
c. wine, decrease consumption of cheese, and move to a higher indifference curve.
d. cheese, decrease consumption of wine, and remain on the same indifference curve.
b
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Which of the following is an act of economic "investment"?
A. A teacher deposits $500 in a retirement account. B. An entrepreneur buys 5,000 shares of stock at $5 a share and then sells the stock at a profit for $60 a share. C. A brewer purchases a new fermentation system for his beer. D. The state legislature authorizes the sale of a state park.
If the supply of oranges is unit elastic, the price elasticity of supply of oranges is
A. 1.0. B. 0.0. C. -1.0. D. -100.0.