Figure 21-7 -Refer to Figure 21-7.Which of the Following Comparisons Is Correct

question 101

Multiple Choice

Figure 21-7
-Refer to Figure 21-7.Which of the following comparisons is correct regarding the marginal rate of substitution (MRS) of donuts for cake?

• A) The MRS is greater between bundles A and B than between bundles B and C.
• B) The MRS is greater between bundles B and C than between bundles A and B.
• C) The MRS is the same between bundles A and B and bundles B and C because all three bundles lie on the same indifference curve.
• D) The MRS is greater between bundles E and B than between bundles B and D.

---

Definitions:

Profit

The financial gain achieved when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Positive-Sum Game

A situation in economics or game theory where all participants can gain or benefit in some way; opposite of a zero-sum game.

Zero-Sum Game

A game theory concept where one participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).

Negative-Sum Game

A situation in which the total losses incurred by the participants are greater than the total gains.