The above figure shows Jane's budget line and two of her indifference curves. When Jane is consuming at her best affordable point, what is her marginal rate of substitution?
A) 2.0 lobster dinners per steak dinner
B) 1.0 lobster dinners per steak dinner
C) 0.5 lobster dinners per steak dinner
D) 0.33 lobster dinners per steak dinner
C
You might also like to view...
Because leisure is a normal good, an increase in income
a. decreases the demand for leisure time and reduces the amount of time allocated to market work b. decreases the demand for leisure time and increases the amount of time allocated to market work and/or nonmarket work c. increases the demand for leisure time and reduces the amount of time allocated to market work and nonmarket work d. increases the demand for leisure time and increases the amount of time allocated to market work and nonmarket work e. has no impact on the demand for leisure time
There are two methods of calculating elasticities. One calculates the ratio of the percentage changes in quantity and price, and the other calculates the average percentage changes in quantity and price. We use the second method because it
a. involves an additional calculation b. is not sensitive to direction of movement c. is sensitive to direction of movement d. is never wrong e. always has the same sign