The consumer's income is $800.
-According to the above figure,why doesn't the consumer choose the combination of 30X and 56Y at point A?
A)MRS is less than .
B)MRS is greater than .
C) is greater than .
D) is less than .

Question

The consumer's income is $800.
-According to the above figure,why doesn't the consumer choose the combination of 30X and 56Y at point A?
A)MRS is less than . 
B)MRS is greater than . 
C) is greater than . 
D) is less than .

Quizplus · Accepted Answer

At point A, the MRS (slope of the indifference curve) is steeper than the slope of the budget constraint. This means that for the consumer to choose the combination of 30X and 56Y, they would have to give up more than the amount of Y they can afford to buy with the reduction in X. Thus, the consumer is better off choosing a combination along a higher indifference curve where the slope is less steep, indicating a lower opportunity cost of X for Y.

The Consumer's Income Is $800