At their current distributions,Andrew's marginal rate of substitution of hamburgers for fish sticks is 6 while Betty's is 2.Both Andrew and Betty could be made better off if:
A)they do not trade and keep their present allotment of hamburger and fish sticks.
B)Andrew trades between two and six of his allotment of hamburgers with Betty for a fish stick.
C)Andrew trades between two and six of his allotment of fish sticks with Betty for a hamburger.
D)Andrew gives all of his hamburgers to Betty for all of her fish sticks.

Question

Quizplus · Accepted Answer

Andrew's marginal rate of substitution (MRS) of hamburgers for fish sticks is 6, meaning he is willing to give up 6 hamburgers for 1 fish stick to maintain the same level of utility. Betty's MRS is 2, meaning she is willing to give up 2 hamburgers for 1 fish stick to maintain her utility. If Andrew trades between 2 and 6 of his hamburgers with Betty for a fish stick, both can improve their utility. Andrew values fish sticks more than he does the hamburgers he is giving up, and Betty values the hamburgers more than the fish stick she is giving up.

At Their Current Distributions,Andrew's Marginal Rate of Substitution of Hamburgers