Bundle L contains 10 units of good X and 20 units of good Y. Bundle M contains 8 units of good X and 21 units of good Y. The consumer is indifferent between bundle L and bundle M. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following correctly expresses the marginal rate of substitution of good X for good Y between these two points?
a. The consumer will give up 1 unit of good X to gain 2 units of good Y.
b. The consumer will give up 2 units of good X to gain 1 unit of good Y.
c. The price of good X is twice as large as the price of good Y.
d. The price of good X is half as large as the price of good Y.
b
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Which of the following is one reason why the income of small family farms has decreased over time?
A) The demand for farm products is price elastic. B) The U.S. population has increased greatly since 1950. C) The demand for farm products is income inelastic. D) Technology has increased farm productivity and market supply.
Suppose the short-run production function is q = 10 ? L. If the wage rate is $10 per unit of labor, then AFC equals
A) 0. B) 1. C) 10/q. D) It cannot be determined from the information provided.