Use the information below to answer the following questions.
Fact 9.2.1 You May Be Paid More (or Less)Than You Think
It's so hard to put a price on happiness, isn't it?
But if you've ever had to choose between a jobs you like and a better-paying one that you like less, you probably wished some economist would tell you how much job satisfaction is worth. Trust in management is by far the biggest component to consider. Say you get a new boss and your trust in management goes up a bit (say, up 1 point on a 10-point scale). That's like getting a 36 percent pay raise. In other words, that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would.
Source: CNN, March 29, 2006
-Refer to Fact 9.2.1. What is the marginal rate of substitution?
A)3.6
B)1
C)36
D)10
E)10 + 36

Question

Use the information below to answer the following questions.
Fact 9.2.1 You May Be Paid More (or Less)Than You Think
It's so hard to put a price on happiness, isn't it?
 But if you've ever had to choose between a jobs you like and a better-paying one that you like less, you probably wished some economist would tell you how much job satisfaction is worth. Trust in management is by far the biggest component to consider. Say you get a new boss and your trust in management goes up a bit (say, up 1 point on a 10-point scale). That's like getting a 36 percent pay raise. In other words, that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36 percent raise would.
Source: CNN, March 29, 2006
-Refer to Fact 9.2.1. What is the marginal rate of substitution?
A)3.6
B)1
C)36
D)10
E)10 + 36

Quizplus · Accepted Answer

The marginal rate of substitution is the rate at which a person is willing to trade one good for another while maintaining the same level of satisfaction. Here, a 1-point increase in trust is equivalent to a 36% pay raise, so the marginal rate of substitution is 3.6 (36% divided by 10 points).

Use the Information Below to Answer the Following Questions