With respect to consuming food and shelter,two consumers face the same prices and both claim to be in equilibrium.We therefore know that
A) they both have the same marginal utility for food.
B) they both have the same marginal utility for shelter.
C) they both have the same MRS of food for shelter.
D) All of the above.

Question

Quizplus · Accepted Answer

The correct answer is C because when two consumers are in equilibrium and face the same prices, it means that their marginal rate of substitution (MRS) of food for shelter must be the same. This is because the MRS, which is the rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility, must equal the price ratio for the consumer to be in equilibrium. The MRS being the same for both consumers implies that they are optimizing their utility given the prices, but it does not necessarily mean they have the same marginal utility for food or shelter individually.

With Respect to Consuming Food and Shelter,two Consumers Face the Same