Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT].
Refer to Figure 19-3.Suppose the marginal rate of substitution [MRS] at point W is 3Y/2X instead of 2Y/1X.Which of the following will be true?
A)The representative consumer's MRS will be less than the MRT,which implies more Y and less X will make all consumers better off.
B)The economy will be producing an efficient output combination.
C)The representative consumer's MRS 3Y/2X will be less than the MRT,which implies more X and less Y will make both consumers better off.
D)The allocation of the goods between the two individuals is efficient.

Question

Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT]. 
Refer to Figure 19-3.Suppose the marginal rate of substitution [MRS] at point W is 3Y/2X instead of 2Y/1X.Which of the following will be true?
A)The representative consumer's MRS will be less than the MRT,which implies more Y and less X will make all consumers better off. 
B)The economy will be producing an efficient output combination. 
C)The representative consumer's MRS 3Y/2X will be less than the MRT,which implies more X and less Y will make both consumers better off. 
D)The allocation of the goods between the two individuals is efficient.

Quizplus · Accepted Answer

The Answer of Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT]. 
Refer to Figure 19-3.Suppose the marginal rate of substitution [MRS] at point W is 3Y/2X instead of 2Y/1X.Which of the following will be true?
A)The representative consumer's MRS will be less than the MRT,which implies more Y and less X will make all consumers better off. 
B)The economy will be producing an efficient output combination. 
C)The representative consumer's MRS 3Y/2X will be less than the MRT,which implies more X and less Y will make both consumers better off. 
D)The allocation of the goods between the two individuals is efficient.

Figure 19-3 Illustrates the Determination of an Efficient Output Mix