John and Belle consume only two goods, x and y. They have strictly convex preferences and no kinks in their indifference curves. At the initial endowment point, the ratio of John's marginal utility of x to his marginal utility of y is J and the ratio of Belle's marginal utility of x to her marginal utility of y is B, where J < B. The competitive equilibrium price ratio is px/py = C. Which of the following is true? a. C> B. b. C < J. c. C = J. d. C = B. e. ]
John and Belle consume only two goods, x and y. They have strictly convex preferences and no kinks in their indifference curves. At the initial endowment point, the ratio of John's marginal utility of x to his marginal utility of y is J and the ratio of Belle's marginal utility of x to her marginal utility of y is B, where J < B. The competitive equilibrium price ratio is px/py = C. Which of the following is true? a. C> B. b. C < J. c. C = J. d. C = B. e. ]
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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Transcribed Image Text:John and Belle consume only two goods, x and y. They have strictly convex
preferences and no kinks in their indifference curves. At the initial endowment point, the ratio
of John's marginal utility of x to his marginal utility of y is J and the ratio of Belle's marginal
utility of x to her marginal utility of y is B, where J < B. The competitive equilibrium price ratio
is px/py = C. Which of the following is true?
a. C> B.
b. C < J.
c. C = J.
d. C = B.
e. J <C<B.
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