Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 21 - Part VII - The Theory of Consumer Choice - Questions for Review - Page 458: 3

Answer

Please see the graph. The marginal rate of substitution is 2.

Work Step by Step

The marginal rate of substitution tells us the number of glasses of wine a consumer would willingly give up in order to get one additional pound of cheese. The price of wine is 3 dollars per glass, and cheese is 6 dollars per pound. So, the marginal rate of substitution is $6/3$, or 2. This means that a consumer would be willing to give up two glasses of wine for one additional pound of cheese.
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