-Tom Is Stranded on a Deserted Island Where He Can

question 291

Essay

-Tom is stranded on a deserted island where he can only consume coconuts and crabs. Two of his indifference curves are in the figure above.
a) Would Tom prefer his consumption to be at point a or at point b? At point b or at point c? Explain your answers.
b) Between points a and b, what is Tom's marginal rate of substitution for a crab?

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Definitions:

Retail Inventory Method

An accounting technique used to estimate inventory value by comparing the cost of goods sold to the total sales.