Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth the marginal rate of substitution of iced tea for sugar is:
A) 0.375.
B) 2.67.
C) diminishing but between 8 and 3.
D) undefined.

Question

Quizplus · Accepted Answer

Since Ms. Sweettooth consumes iced tea and sugar in fixed proportions, the marginal rate of substitution is undefined because she does not substitute one for the other; they are consumed in a fixed ratio.

Ms Sweettooth Always Consumes Iced Tea and Sugar in Fixed