Fact 9.3.1

Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is $0.50 a bag. Initially, Marc's best affordable point is 10 cans of root beer and 20 bags of chips.

Refer to Fact 9.3.1. What was Marc's initial marginal rate of substitution between the two goods?

Question

Fact 9.3.1 
 
 Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is $0.50 a bag. Initially, Marc's best affordable point is 10 cans of root beer and 20 bags of chips.  
 
 Refer to Fact 9.3.1. What was Marc's initial marginal rate of substitution between the two goods?

Answer

It is equal to 10 cans of root beer given up for each bag of chips gained.

Answer

It is equal to 2 cans of root beer given up for each bag of chips gained.

Answer

It is equal to 1 can of root beer given up for each bag of chips gained.

Answer

It is equal to 1/2 can of root beer given up for each bag of chips gained.

Answer

It cannot be calculated with the information given.

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Fact 9.3.1 Marc has an income of $20 and spends it on two goods, root beer (...

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