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:

Ruminative Responses

The tendency to compulsively focus on the causes and consequences of one's distress rather than taking action to relieve it.

Mentally Dwelling

The act of continuously thinking about or fixating on a certain thought or problem without reaching a resolution.

Mood

A temporary state of mind or feeling.

Cognitive Triad

A concept in cognitive therapy that describes an individual's negative view of themselves, their world, and their future.