Figure 21-17 -Refer to Figure 21-17.Bundle B represents a point where A) MRSxy Py/Px. B) MRSxy = Px/Py. C) MRSxy Px/Py.

Question

Figure 21-17
 
-Refer to Figure 21-17.Bundle B represents a point where
A) MRSxy > Py/Px. 
B) MRSxy = Px/Py. 
C) MRSxy < Px/Py. 
D) MRSxy > Px/Py.

Quizplus · Accepted Answer

Bundle B represents a point where the marginal rate of substitution (MRS) of good x for good y is greater than the price ratio of good x to good y (Px/Py), indicating that the consumer is willing to give up more of good y to obtain an additional unit of good x than the market requires.

Figure 21-17 -Refer to Figure 21-17.Bundle B Represents a Point Where