M01 broo6651 1e sg c01


a. What can you say about Jon’s marginal rate of substitution



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Ch03
sol 03, sol 03, Ch07
a. What can you say about Jon’s marginal rate of substitution
Jon’s marginal rate of substitution can be defined as the number of cans of Coke he would be willing to give up in exchange fora can of Sprite. Since he is always willing to trade one for one, his MRS is equal to 1.
b. Draw a set of indifference curves for Jon.
Since Jon is always willing to trade one can of Coke for one can of Sprite, his indifference curves are linear with a slope of 1. Seethe diagrams below part c.
c. Draw two budget lines with different slopes and illustrate the satisfaction-maximizing choice.

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