Given that income is $500 and P_X = $20 and P_Y = $5,what is the market rate of substitution between goods X and Y? A) 100 B) -4 C) -20 D) 25

Question

Quizplus · Accepted Answer

The market rate of substitution between goods X and Y can be found by dividing the price of good X by the price of good Y. Given P_X = $20 and P_Y = $5, the rate is $20/$5 = 4. Since it's a rate of substitution, it's typically represented as a negative, indicating that one good is substituted for another, hence -4.

Given That Income Is $500 and PX = $20 and PY

Given That Income Is $500 and P_X = $20 and P_Y