Figure 8.3

-Refer to Figure 8.3.What is the marginal rate of substitution between g and h?

Question

Figure 8.3
 
-Refer to Figure 8.3.What is the marginal rate of substitution between g and h?

Quizplus · Accepted Answer

The marginal rate of substitution between g and h can be calculated by finding the slope of the indifference curve at the point where the consumer is currently consuming g and h. In this case, the slope of the indifference curve at point A is steeper than the slope of the budget constraint, indicating that the consumer would be willing to give up more cookies (closer to 3 than to 2) in order to obtain an additional unit of h. Therefore, the best choice for the consumer would be to consume more h and less g, moving towards point B.

Figure 8.3 -Refer to Figure 8.3.What Is the Marginal Rate of Substitution