In the graph, what is the MRS when the consumer moves from B to C? An indifference curve through bundles A (2, 15), B (3, 10), C (5, 6) and D (10, 3), where the first number is good 1 and the second is good 2.

In the graph, what is the MRS when the…

In the graph, what is the MRS when the consumer moves from B to C?

Question 39

MediumOriginal question

In the graph, what is the MRS when the consumer moves from B to C?

An indifference curve through bundles A (2, 15), B (3, 10), C (5, 6) and D (10, 3), where the first number is good 1 and the second is good 2.

4 units of good 2 per unit of good 1Correct answerYour answer5 units of good 2 per unit of good 1Correct answerYour answer2 units of good 2 per unit of good 1Correct answerYour answer0.5 unit of good 2 per unit of good 1Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

From B (3, 10) to C (5, 6): good 1 rises by 2, good 2 falls by 4.
MRS = 4 ÷ 2 = 2 units of good 2 per unit of good 1, lower than the 5 from A to B: the MRS diminishes.

Worth noting

4 is the total fall in good 2, not the fall per unit of good 1.

Concept: Diminishing MRS on a curve
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsIndifference curves and MRS

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Ten questions from Budget Line & Optimal Choice, at your own pace.

Practise this chapter →

Ten questions from Budget Line & Optimal Choice, at your own pace.

In the graph, what is the MRS when the consumer moves from B to C?

Question 39

Explanation