Aplia Homework: Consumer Choice: Individual and Market Demand Attempts Keep the

Question

Aplia Homework: Consumer Choice: Individual and Market Demand Attempts Keep the Highest: 12 9. Calculating the marginal rate of substitution (MRS) Beth endays esting mulfins and scones. The tollowing graph displays one of Deth's indifference curves, which show her preference for scones and muffins per month. Points A, &,C and D represent peints on the same Indifterence eurve. For example, paint A represents a point on the indifflerence curve corresponding to 4 mutins and s6 scones per manth. no,ta e Curve Between points A and B, Beth's merginal rete of substitution ia Becween points C and D, Beth's marginal rate of subaitution is

Explanation / Answer

Marginal rate of substitution is the number of unit sacrificed of good one in order to get an additional unit of other good given same level of utility or satisfaction

Thus marginal rate of substitution from A to B=2/20=1/10

Simialrly marginal rate of substitution from C to D=2/4=1/2

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