Suppose Frank Buys Only Milk and Cereal, Both of Which

question 432

Multiple Choice

Suppose Frank buys only milk and cereal, both of which are normal goods, and he always maximizes his utility.Suppose Frank's boss cuts Frank's pay by $200 per month.What happens to Frank's marginal rate of substitution between milk and cereal?

• A)It fluctuates randomly.
• B)It decreases.
• C)It increases.
• D)It stays constant.

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Definitions:

Moderately

To a certain extent but not excessively; within reasonable limits.

Agoraphobia

A fear of being in situations where escape might be difficult or that help wouldn't be available if things go wrong.

Fear

An emotional response to a perceived threat, which can be real or imagined, leading to a fight-or-flight reaction.

Crowded

A condition or feeling of being overly filled with people or objects, often leading to discomfort.