Suppose at the Current Consumption Bundle, the Marginal Rate of Substitution

question 77

Multiple Choice

Suppose at the current consumption bundle, the marginal rate of substitution of pizza for pepsi is 4 litres of pepsi for every one pizza.If we took four litres of pepsi away from our consumer and gave them one extra pizza, which of the following statements would be correct?

• A)the consumer would be on a higher indifference curve
• B)the consumer would be on a lower indifference curve
• C)the consumer's marginal rate of substitution of pepsi for pizza would rise
• D)the consumer's marginal rate of substitution of pepsi for pizza would fall

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Definitions:

Basic Trust

A fundamental sense of trust in the world and others, often developed during infancy, that is seen as the foundation of healthy psychological development.

Responsive

Showing a positive and quick reaction to something, either emotionally or by taking action.

Sensitive

Easily affected by external conditions or stimuli.

Psychosocial Crisis

A theory by Erik Erikson that describes eight stages of human development, each characterized by a different crisis that must be resolved for healthy personality development.