Assertion (A): If MRS is greater than P₁ ÷ P₂, the consumer gains by buying more of good 1.
Reason (R): He values one more unit of good 1 at more units of good 2 than the market charges.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true, and R explains A.

Concept: MRS above the price ratio
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe consumer's optimal choice

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Assertion (A): If MRS is greater than P₁ ÷ P₂, the consumer gains by buying more of good 1.Reason (R): He values one more unit of good 1 at more units of good 2 than the market charges.

Explanation

Assertion (A): If MRS is greater than P₁ ÷ P₂, the consumer gains by buying more of good 1.
Reason (R): He values one more unit of good 1 at more units of good 2 than the market charges.