If the Marginal Rate of Substitution of Pepsi for Pizza

question 106

Multiple Choice

If the marginal rate of substitution of pepsi for pizza is six litres of pepsi for one pizza slice, and the price of pepsi is $1 per litre and the price of pizza is $3 per slice, then this consumer should:

• A)trade pepsi for pizza and end up on a higher indifference curve
• B)trade pizza for pepsi and end up on a higher indifference curve
• C)do nothing as they are already maximizing utility
• D)we cannot say without more information

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Definitions:

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