Figure 21-10
-Refer to Figure 21-10.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 21-10 
-Refer to Figure 21-10.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 are priced at $5, the MRS should be 1, indicating the consumer is willing to trade one Skittle for one M&M.

Figure 21-10 -Refer to Figure 21-10.Assume That the Consumer Depicted in the Depicted