Ed and Al Both Consume Only Bread and Cheese

question 22

Multiple Choice

Ed and Al both consume only bread and cheese.Both of them always choose to have some bread and some cheese, and both have strictly convex preferences.However, Ed likes to have a great deal of bread with a little cheese, and Al likes lots of cheese with a little bread.Both face the same prices for both goods and have chosen bundles to maximize their utilities subject to their budgets.

• A)Al's marginal rate of substitution is larger in absolute value than Ed's.
• B)Ed's marginal rate of substitution is larger in absolute value than Al's.
• C)Their marginal rates of substitution are the same.
• D)Who has the larger marginal rate of substitution depends on income levels.
• E)There is not enough information for us to be able to tell who has the larger marginal rate of substitution.

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Definitions:

Systematic Desensitization

A behavior therapy used to reduce phobic anxiety through the gradual exposure to the feared stimulus paired with relaxation exercises.

Anxiety-arousing Stimuli

External events or circumstances that provoke anxiety responses.

Systematic Desensitization

A behavioral therapy technique used to reduce phobias or anxiety through gradual exposure to the feared object or situation while employing relaxation techniques.

Nausea-producing Drug

A medication that induces the sensation of wanting to vomit as a side effect.