A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will
A) increase.
B) decrease.
C) stay the same.
D) change, but there is not enough information to know how.

Question

Quizplus · Accepted Answer

The marginal rate of transformation (MRT) reflects the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility. It is determined by the relative prices of the two goods and the consumer's preferences, not by the consumer's income. Therefore, if a consumer's income rises and there is no change in the prices of food (F) or shelter (S), the MRT of F for S will stay the same because the trade-off between the two goods, based on their prices and the consumer's preferences, has not changed.

A Consumer Buys Food (F)and Shelter (S)