Fact 9.3.1 Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is 50.50 a bag. Initially, Marc chooses to consume 10 cans of root beer and 20 bags of chips. Then the price of root beer rises to $1.50 per can and the price of chips falls to 50.25 a bag Refer to Fact 9.3.1. Marc's initial marginal rate of substitution was OA equal to 2 cans of root beer given up for each bag of chips gained. O equal to 10 cans of root beer given up for each bag of chips gained. OC not calculable with the information given. O equal to 1 can of root beer given up for each bag of chips gained. OE equal to 1/2 can of root beer given up for each bag of chips gained.
Fact 9.3.1 Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is 50.50 a bag. Initially, Marc chooses to consume 10 cans of root beer and 20 bags of chips. Then the price of root beer rises to $1.50 per can and the price of chips falls to 50.25 a bag Refer to Fact 9.3.1. Marc's initial marginal rate of substitution was OA equal to 2 cans of root beer given up for each bag of chips gained. O equal to 10 cans of root beer given up for each bag of chips gained. OC not calculable with the information given. O equal to 1 can of root beer given up for each bag of chips gained. OE equal to 1/2 can of root beer given up for each bag of chips gained.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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