You view tea and scones as perfect complements, and you prefer to consume one cup of...

You view tea and scones as perfect complements, and you prefer to consume one cup of tea with one scone. Also, your indierence curves are plotted with tea on the vertical axis. If you presently have two cups of tea and one scone, what this the marginal rate of substitution (MRS) at this point?

A) +1 B) -1 C) Zero D) Infinity

Why the answer is infinity? ( I cant figure out the slope of dy/dx)

What about if I have one cup of tea and two scones? Is the answer is 0?

Thx

Solutions

Expert Solution

The Marginal Rate of Substitution is only the slope of the Indifference curve. It is calculated by dividing the change in quantity of Good Y by the change in quantity of Good X. Good Y is tea in our case as it is plotted on the vertical axis and Good X is scones. The slope will be calculated as follows-

Hence, the right answer is Option D - Infinity.

Hence, the answer under the changed scenario is zero.

Rahul Sunny answered 1 year ago

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