Figure 21-19
-Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income of $50. The price of Skittles is $5 and the price of M&M's is $5. This consumer will choose a consumption bundle where the marginal rate of substitution is
A)10.
B)5.
C)1.
D)1/5.

Question

Figure 21-19 
-Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income of $50. The price of Skittles is $5 and the price of M&M's is $5. This consumer will choose a consumption bundle where the marginal rate of substitution is
A)10. 
B)5. 
C)1. 
D)1/5.

Quizplus · Accepted Answer

The consumer will choose a consumption bundle where the marginal rate of substitution (MRS) equals the ratio of the prices of the two goods. Since both Skittles and M&M's are priced at $5, the MRS will be 1, indicating the consumer is willing to trade one Skittle for one M&M.

Figure 21-19 -Refer to Figure 21-19. Assume That the Consumer Depicted in Consumer