Asked by
Adrian Cosino
on Oct 25, 2024
Verified
Pencils sell for 10 cents and pens sell for 50 cents. Suppose Jack, whose preferences satisfy all of the basic assumptions, buys 5 pens and one pencil each semester. With this consumption bundle, his MRS of pencils for pens is 3. Which of the following is true?
A) Jack could increase his utility by buying more pens and fewer pencils.
B) Jack could increase his utility by buying more pencils and fewer pens.
C) Jack could increase his utility by buying more pencils and more pens.
D) Jack could increase his utility by buying fewer pencils and fewer pens.
E) Jack is at a corner solution and is maximizing his utility.
MRS of Pencils
The marginal rate of substitution of pencils, indicating how much of another good a consumer is willing to give up for one more pencil.
Utility
In economics, a measure of satisfaction or happiness that a consumer derives from consuming goods and services.
Consumption Bundle
A collection of goods and services that an individual or household purchases over a given period.
- Comprehend the elements that contribute to a consumer achieving maximum utility in their decisions.
Verified Answer
AB
Learning Objectives
- Comprehend the elements that contribute to a consumer achieving maximum utility in their decisions.