Good X B A IC2 Good Y At B, the MRS is greater than the opportunity cost of Y At B, the MRS is greater than the opportunity cost of X O At C, the MRS is greater than the opportunity cost of Y At C, the MRS is greater than the opportunity cost of X O At B, the person would be happier consuming less of X and more of Y because the value of Y in exchange is less than the MRS At C, the person would be happier consuming less of X and more of Y because the value of Y in exchange is less than the MRS

Good X B A IC2 Good Y At B, the MRS is greater than the opportunity cost of Y At B, the MRS is greater than the opportunity cost of X O At C, the MRS is greater than the opportunity cost of Y At C, the MRS is greater than the opportunity cost of X O At B, the person would be happier consuming less of X and more of Y because the value of Y in exchange is less than the MRS At C, the person would be happier consuming less of X and more of Y because the value of Y in exchange is less than the MRS

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two goods are produced and consumed; rice and beans. The production opportunity cost for Casey is 4.00kg of rice for every kilogram of beans. Rick has a production opportunity cost of 2.00 kg of rice for every kilogram of beans. Casey eventually realizes that, through trade, both individuals can be better off. Rick is willing to trade. What price can be settled between these two parties such that both individuals can enjoy more rice and beans?
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