Figure 21-10
-Refer to Figure 21-10. Which of the following comparisons is correct regarding the marginal rate of substitution (MRS) of donuts for cake?
A)The MRS is greater between bundles A and B than between bundles B and C.
B)The MRS is greater between bundles B and C than between bundles A and B.
C)The MRS is the same between bundles A and B and bundles B and C because all three bundles lie on the same indifference curve.
D)The MRS is greater between bundles E and B than between bundles B and D.

Question

Figure 21-10 
-Refer to Figure 21-10. Which of the following comparisons is correct regarding the marginal rate of substitution (MRS) of donuts for cake?
A)The MRS is greater between bundles A and B than between bundles B and C. 
B)The MRS is greater between bundles B and C than between bundles A and B. 
C)The MRS is the same between bundles A and B and bundles B and C because all three bundles lie on the same indifference curve. 
D)The MRS is greater between bundles E and B than between bundles B and D.

Quizplus · Accepted Answer

The MRS is greater between bundles A and B than between bundles B and C because the MRS typically decreases as you move down along an indifference curve, reflecting diminishing marginal utility.

Figure 21-10 -Refer to Figure 21-10. Which of the Following Comparisons Is