Penelope’s ratio of marginal utility for a books to crayons (MUB / MUC) is 3/1, while...
Penelope’s ratio of marginal utility for a books to crayons (MUB / MUC) is 3/1, while the price ratio of books to crayons (PB / PC) is 1.5/1.0. Which of the following is/are true? Hint: you can approach this question by considering the marginal rate of substitution relative to the price ratio (as presented), or you can cross-multiple to put it into the MUB / PB and MUC / PC format.
A. Penelope can increase utility by decreasing her consumption of books by 4 units and increasing her consumption of crayons by 6 units.
B. One more book provides Penelope with 3 times the utility of one more box of crayons.
C. Penelope can increase utility by decreasing her consumption of crayons by 1 unit and increasing her consumption of books by 1.5 units.
D. Penelope can increase utility by decreasing her consumption of crayons by 3 units and increasing her consumption of books by 2 units.
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Penelope’s ratio of marginal utility for a books to crayons (MUB
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Please help with these questions
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