Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve.
-Refer to Figure 21-24. At his optimum, Steve is willing to give up about
A)0.75 pounds of pears for 1 pound of apples.
B)0.75 pounds of apples for 1 pound of pears.
C)1.20 pounds of pears for 1 pound of apples.
D)1.20 pounds of apples for 1 pound of pears.

Question

Figure 21-24 The figure shows three indifference curves and a budget constraint for a certain consumer named Steve. 
-Refer to Figure 21-24. At his optimum, Steve is willing to give up about
A)0.75 pounds of pears for 1 pound of apples. 
B)0.75 pounds of apples for 1 pound of pears. 
C)1.20 pounds of pears for 1 pound of apples. 
D)1.20 pounds of apples for 1 pound of pears.

Quizplus · Accepted Answer

At his optimum, Steve's marginal rate of substitution (MRS) between pears and apples is equal to the price ratio. If he is willing to give up 1.20 pounds of pears for 1 pound of apples, it indicates his MRS is 1.20, which aligns with the given choice.

Figure 21-24 the Figure Shows Three Indifference Curves and a Budget