Figure 10-4
-Refer to Figure 10-4.What is the marginal rate of substitution between g and h?

Question

Figure 10-4 
-Refer to Figure 10-4.What is the marginal rate of substitution between g and h?

Quizplus · Accepted Answer

The marginal rate of substitution between g and h is the slope of the indifference curve at that point. From the graph, we can see that the slope of the indifference curve passing through point G is steeper than the slope of the indifference curve passing through point H. This means that the consumer is willing to give up more h for an additional g than vice versa. Therefore, the consumer should choose a combination of g and h that lies on the indifference curve passing through point G, as this gives the most utility. The point on this indifference curve closest to the budget constraint is point B, which corresponds to 2 cookies of g and 3 cookies of h. So the best choice is B.

Figure 10-4 -Refer to Figure 10-4.What Is the Marginal Rate of Substitution