Figure 21-6 -Refer to Figure 21-6.Assume That the Consumer Depicted in the Consumer

question 154

Multiple Choice

Figure 21-6

-Refer to Figure 21-6.Assume that the consumer depicted in the figure has an income of $20 to spend entirely on yogurt and granola bars.The price of a tub of yogurt is $2,and the price of a pack of granola bars is $4.This consumer will choose a consumption bundle where the marginal rate of substitution is equal to which of the following

• A)1/3
• B)1/2
• C)2/3

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Definitions:

Demand Curve

A diagram illustrating the link between the cost of an item and the desired quantity by buyers.

Purely Competitive Firm

A company operating in a market where there are many buyers and sellers, the products are homogenous, and there is free entry and exit in the market.

Average Revenue

The revenue per unit of output sold, calculated by dividing total revenue by the number of units sold.

Marginal Revenue

The additional revenue that is gained from selling one more unit of a good or service.