Suppose at the Consumer's Current Consumption Bundle the Marginal Rate

question 45

Multiple Choice

Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese.The price of one pound of cheese is $6 and the price of a bottle of wine is $10.The consumer should

• A)increase consumption of cheese and decrease consumption of wine, and move to a lower indifference curve.
• B)increase consumption of cheese and decrease consumption of wine, and move to a higher indifference curve.
• C)increase consumption of wine and decrease consumption of cheese, and move to a higher indifference curve.
• D)increase consumption of cheese and decrease consumption of wine, and remain on the same indifference curve.

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