Figure 21-18 -Refer to Figure 21-18. Bundle D represents a point where A)MRS_xy P_y/P_x. B)MRS_xy = P_x/P_y. C)MRS_xy

Name: Figure 21-18 -Refer to Figure 21-18. Bundle D represents a point where A)MRS xy > P y /P x . B)MRS xy = P x /P y . C)MRS xy x /P y . D)MRS xy y /P x .
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Question

Figure 21-18 -Refer to Figure 21-18. Bundle D represents a point where A)MRS_xy > P_y/P_x. B)MRS_xy = P_x/P_y. C)MRS_xy < P_x/P_y. D)MRS_xy < P_y/P_x.

Quizplus · Accepted Answer

Bundle D is located where the slope of the MR curve (MRSS1U1B1xy) is less than the slope of the price ratio (PS1U1B1x/PS1U1B1y). Therefore, MRSS1U1B1xyS1U1B0 < PS1U1B1xS1U1B0/PS1U1B1yS1U1B0, which corresponds to choice C.

Figure 21-18 -Refer to Figure 21-18. Bundle D Represents a Point Where