17.
The rate at which a consumer is willing to purchase one good instead of another is called
the budget constraint.
the maximization rate.
the marginal rate of substitution.
opportunity cost.
the total rate of substitution.
20.
A friend of Dylan’s is operating a concession stand for a youth sporting league and wants Dylan’s advice on pricing. He plans to sell popcorn for $4, but is unsure of the price to charge for peanuts. Popcorn provides Dylan with 36 utils, while peanuts provide 27 utils. Dylan offers his personal preference as a suggestion, so what is the maximum price Dylan is willing to pay for peanuts?
$9
$4
$1.50
$3
$7
Q17
Answer
Option 3
The marginal rate of substitution
The rate at which a consumer is willing to exchange one good for
another is MRS which is depicted by the indifference curve
slope.
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Q20
Answer
Option 4
A utility is maximum when the per dollar marginal utility is
maximum
MUx/Px=MUy/Py
MUx=MU of popcorn
Px=price of popcorn
MUy=MU of peanuts
Py=price of peanuts
36/4=27/Py
Py=(27*4)/36
Py=$3
the maximum price Dylan is willing to pay for peanuts is
$3
17. The rate at which a consumer is willing to purchase one good instead of another...