Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie.Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie.Assuming that these rates of substitution don't depend on the amounts consumed,which of the following trades would make Joe and Mary better off?
A) Joe gives Mary 5 crackers in exchange for a cookie
B) Joe gives Mary 2 crackers in exchange for a cookie
C) Joe gives Mary 6 crackers in exchange for a cookie
D) There is not enough information to answer the question

Question

Quizplus · Accepted Answer

Joe values a cookie at 6 crackers, meaning he is willing to give up 6 crackers for a cookie. Mary values a cookie at 3 crackers, meaning she is willing to give up 3 crackers for a cookie. If Joe gives Mary 5 crackers in exchange for a cookie, Joe is giving up less than he values a cookie (5 instead of 6 crackers), and Mary is receiving more than she values a cookie (5 instead of 3 crackers). This trade makes both Joe and Mary better off.

Suppose Joe's MRS for Cookies with Crackers Is 6 Crackers