Figure 21-9

-Refer to Figure 21-9.If point B is the consumer's optimum and the price of marshmallows is $2 per bag,what is the price of a bag of chocolate chips
A)$1.50
B)$2.70
C)$4.00
D)$6.00

Question

Figure 21-9
 
-Refer to Figure 21-9.If point B is the consumer's optimum and the price of marshmallows is $2 per bag,what is the price of a bag of chocolate chips
A)$1.50 
B)$2.70 
C)$4.00 
D)$6.00

Quizplus · Accepted Answer

At the consumer's optimum, the marginal rate of substitution (MRS) equals the price ratio of the two goods. If the price of marshmallows is $2, and point B is the optimum, the price of chocolate chips must be $4 to maintain the MRS and price ratio balance.

Figure 21-9 -Refer to Figure 21-9.If Point B Is the Consumer's Optimum