Use the figure below to answer the following questions. Figure 9.2.3
-Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is
A)1 book per CD.
B)zero.
C)3/2 books per CD.
D)2/3 books per CD.
E)0.5 books per CD.

Question

Use the figure below to answer the following questions.  Figure 9.2.3
-Refer to Figure 9.2.3.Rashid buys only books and CDs.The figure shows his preferences.When Rashid chooses the consumption point of 3 books and 2 CDs,his marginal rate of substitution is
A)1 book per CD. 
B)zero. 
C)3/2 books per CD. 
D)2/3 books per CD. 
E)0.5 books per CD.

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to trade one good for another while keeping their utility constant. In this case, Rashid is willing to give up 1 book for 2 CDs, so the MRS is 1 book per CD.

Use the Figure Below to Answer the Following Questions