Suppose a consumer's MRS is given by the formula MRS_PT = T/P,where P stands for the number of pieces of pizza and T stands for the number of tacos.Starting at 12 tacos and 4 pizzas,the consumer must receive: A) 3 tacos to compensate them for the loss of one piece of pizza. B) 3 pieces of pizza to compensate them for the loss of one taco. C) 1/3 taco to compensate them for the loss of one piece of pizza. D) 1/3 piece of pizza to compensate them for the loss of one taco.

Question

Quizplus · Accepted Answer

The MRS is T/P, so at 12 tacos and 4 pizzas, MRS = 12/4 = 3. This means the consumer is willing to give up 3 tacos for 1 pizza.

Suppose a Consumer's MRS Is Given by the Formula MRSPT

Suppose a Consumer's MRS Is Given by the Formula MRS_PT