Exhibit 6A-7 Consumer equilibrium

-As shown in Exhibit 6A-7, the marginal rate of substitution (MRS) at point B is equal to:
A) 0.33.
B) 2.0.
C) 0.5.
D) 3.0.

Question

Exhibit 6A-7 Consumer equilibrium
​ 
-As shown in Exhibit 6A-7, the marginal rate of substitution (MRS) at point B is equal to:
A) 0.33. 
B) 2.0. 
C) 0.5. 
D) 3.0.

Quizplus · Accepted Answer

The MRS at point B is the slope of the indifference curve passing through point B, which is the absolute value of the ratio of the marginal utilities of goods X and Y at that point, MRSxy = |MUx/MUy|. From the graph, we can estimate that the MUx/MUy ratio at point B is approximately 2, so the MRS must be 1/2 or 0.5. Therefore, the correct answer is C.

Exhibit 6A-7 Consumer Equilibrium