Max consumes only yogurt and almonds, and he is on his highest possible indifference curve.Two bundles on this indifference curve are bundle A (4 yogurts and 2 almonds), bundle B (3 yogurts and 3 almonds).Between points A and B, what is Max's marginal rate of substitution of yogurt for almonds?
A)1
B)2
C)3
D)1.33

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which Max is willing to give up almonds for yogurt while remaining on the same indifference curve. Between bundles A and B, Max gives up 1 yogurt to gain 1 almond, so the MRS is 1.

Max Consumes Only Yogurt and Almonds, and He Is on His