Figure 21-18

-Refer to Figure 21-18.Assume that the consumer depicted in the figure has an income of $50.The price of Skittles is $5 and the price of M&M's is $5.This consumer will choose a consumption bundle where the marginal rate of substitution is
A) 10.
B) 5.
C) 1.
D) 1/5.

Question

Figure 21-18
 
-Refer to Figure 21-18.Assume that the consumer depicted in the figure has an income of $50.The price of Skittles is $5 and the price of M&M's is $5.This consumer will choose a consumption bundle where the marginal rate of substitution is
A) 10. 
B) 5. 
C) 1. 
D) 1/5.

Quizplus · Accepted Answer

The consumer will choose a consumption bundle where the marginal rate of substitution (MRS) equals the ratio of the prices of the two goods. Since both Skittles and M&M's have the same price of $5, the MRS will be 1.

Figure 21-18 -Refer to Figure 21-18.Assume That the Consumer Depicted in the Consumer