Figure 3-1 shows the preferences of a consumer toward reading books and watching movies.
-Refer to Figure 3-1.Given that the price of a book is $4 and a movie ticket costs $5,the consumer's marginal rate of substitution in equilibrium equals _____.
A)1
B)5/4
C)4/5
D)Cannot be determined without more information

Question

Figure 3-1 shows the preferences of a consumer toward reading books and watching movies. 
-Refer to Figure 3-1.Given that the price of a book is $4 and a movie ticket costs $5,the consumer's marginal rate of substitution in equilibrium equals _____.
A)1 
B)5/4 
C)4/5 
D)Cannot be determined without more information

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) in equilibrium is the ratio of the prices of the two goods, which is the price of the book ($4) divided by the price of the movie ticket ($5), resulting in 4/5.

Figure 3-1 Shows the Preferences of a Consumer Toward Reading