Scenario 16.2: Sam and Sally Are the Only Consumers in an Economy

question 19

Multiple Choice

Scenario 16.2:
Sam and Sally are the only consumers in an economy where tee shirts and candy are the only commodities that are consumed. The marginal utility schedule for each appears below.
Sam tee shirts MU(tee shirts) Candy MU(Candy)
1 10 1 6
2 9 2 5
3 8 3 4
4 7 4 5
5 6 5 4
Sally tee shirts MU(tee shirts) Candy MU(Candy)
1 24 1 12
2 19 2 9
3 18 3 8
4 14 4 7
5 10 5 3
There are 7 candies and 7 tee shirts total in the economy.
Consider the case when the goods are redistributed such that Sam has 3 tee shirts and 3 candies. Sally has 4 tee shirts and 4 candies.
-Refer to Scenario 16.2. What is Sally's marginal rate of substitution of tee shirts for candy at the current distribution?

• A) 7/2
• B) 2
• C) 1/2
• D) It is impossible to determine without the prices of each commodity.

---

Definitions:

Proletariat

A term used in Marxist theory to describe the class of workers who do not own the means of production and must sell their labor to survive.

Bourgeoisie

a class of people in a capitalist society who own the means of production and thus have economic and social power over the working class or proletariat.

Analyzed authority

The process of examining and questioning the basis, nature, and effects of authority within various social structures and institutions.

Power

The faculty or proficiency to control or impact the actions of people or the development of circumstances.