The Following Diagram Shows One Indifference Curve Representing the Preferences

question 6

Multiple Choice

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

• A)2/5
• B)1
• C)5/2

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Definitions:

P(Z < 2)

The probability that a value Z, on a standard normal distribution, is less than 2.

Normal Distribution

A bell-shaped probability distribution characterized by its mean and standard deviation, indicating that data close to the mean are more prevalent.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, indicating how spread out the data points are.

Normally Distributed

Describes a distribution of data that forms a bell-shaped curve, symmetrical about its mean, implying that mean, median, and mode are equal.