Asked by
Chris Akukwe
on Oct 27, 2024Verified
Max consumes only yogurt and almonds,and he is on his highest possible indifference curve.Bundle A (4 yogurts and 2 almonds) and bundle B (3 yogurts and 3 almonds) are on this indifference curve.Between points A and B,what is Max's marginal rate of substitution of yogurt for almonds?
A) 1
B) 2
C) 3
D) 1.33
Marginal Rate
Generally refers to the rate at which one quantity changes with respect to a change in another, often used in the context of taxes or substitution rates.
Indifference Curve
A visual depiction illustrating various pairings of two products that deliver the same degree of happiness and usefulness to a buyer.
Substitution
The act of replacing one item or factor with another due to factors like cost, preferences, or availability, often affecting consumer choices and market dynamics.
- Define and calculate the marginal rate of substitution.
Verified Answer
KT
Learning Objectives
- Define and calculate the marginal rate of substitution.