Use the following to answer questions 21-22:
Figure 4.9
-(Figure 4.9) Suppose that the consumer moves from point A to point B along her indifference curve. If the marginal utility of winter coats is 25, the marginal utility of wool sweaters is:
A) 12.5.
B)2)
C)16.
D) 50.

Question

Use the following to answer questions 21-22:
Figure 4.9 
-(Figure 4.9) Suppose that the consumer moves from point A to point B along her indifference curve. If the marginal utility of winter coats is 25, the marginal utility of wool sweaters is:
A) 12.5. 
B)2) 
C)16. 
D) 50.

Quizplus · Accepted Answer

The movement along an indifference curve implies that the total utility remains constant. Therefore, the marginal rate of substitution (MRS) between the two goods is equal to the ratio of their marginal utilities. If the marginal utility of winter coats is 25, then the marginal utility of wool sweaters must be 50 to maintain the same level of utility, given the MRS is 1:2.

Use the Following to Answer Questions 21-22