If Fred's Marginal Rate of Substitution of Salad for Pizza

question 50

Multiple Choice

If Fred's marginal rate of substitution of salad for pizza equals 5,then

• A) he would give up 5 pizzas to get the next salad.
• B) he would give up 5 salads to get the next pizza.
• C) he will eat five times as much pizza as salad.
• D) he will eat five times as much salad as pizza.

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Definitions:

Fixed Inputs

Resources or factors of production that cannot be increased or decreased in the short run, often including capital and land.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating the substitutability or complementarity between the two goods.

Coffee

A popular beverage made from roasted and ground beans of the Coffea plant, consumed for its stimulating effects.

Tea

Tea is a beverage made by pouring hot or boiling water over cured or fresh leaves of the Camellia sinensis plant, traditionally consumed hot but also enjoyed cold.