Figure: Music and Movie Downloads 3 Refer to the figure. What is the marginal rate of substitution (MRS) between bundle A and bundle B in this figure?
A) The MRS is 4.5; the consumer is willing to trade 4.5 movie downloads for 1 music download.
B) The MRS is 3; the consumer is willing to give up 3 movie downloads for an additional music download.
C) The MRS is 1.5; the consumer will buy 1.5 times as many music downloads as movie downloads.
D) The MRS is 1; the consumer faces a one-to-one tradeoff.

Question

Figure: Music and Movie Downloads 3  Refer to the figure. What is the marginal rate of substitution (MRS) between bundle A and bundle B in this figure?
A) The MRS is 4.5; the consumer is willing to trade 4.5 movie downloads for 1 music download. 
B) The MRS is 3; the consumer is willing to give up 3 movie downloads for an additional music download. 
C) The MRS is 1.5; the consumer will buy 1.5 times as many music downloads as movie downloads. 
D) The MRS is 1; the consumer faces a one-to-one tradeoff.

Quizplus · Accepted Answer

The MRS between A and B is the slope of the straight line between them, which is -3/1=-3. This implies that the consumer is willing to give up 3 movie downloads for an additional music download. Therefore, bundle B is the best choice as it provides a higher quantity of music downloads without sacrificing too many movie downloads.

Figure: Music and Movie Downloads 3 Refer to the Figure