Answered: Clara is indifferent between bundles…

Clara is indifferent between bundles (1, 2) and (2, 1). If she has diminishing MRS, which bundle does she prefer to these? a. (1.5, 1.5) O b. (0,3) O c. (3,0) Od. Not enough information

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 2SQ

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Clara is indifferent between bundles (1, 2) and (2, 1). If she has diminishing MRS, which bundle does she prefer to these?
a. (1.5, 1.5)
O b. (0, 3)
Oc. (3, 0)
d. Not enough information

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