Sofia's Utility Is a Function of Golf (G) and Music

question 7

Multiple Choice

Sofia's utility is a function of golf (G) and music lessons (M) , where MU_G = 1/G and MU_M = 1/M. What is MRS_GM when M = 10 and G = 4?

• A) 2.5
• B) 14
• C) 0.4
• D) 6

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Definitions:

MR Curve

The Marginal Revenue curve represents the change in total revenue that results from selling one additional unit of a good or service.

Opportunity Costs

The value of the best alternative forgone when a decision is made to pursue a certain action.

MR

Marginal Revenue, the increase in revenue that results from selling one additional unit of a product.

Average Total Costs

The total cost of production divided by the quantity produced, representing the per-unit cost of production.