Consider an individual with preferences over apple juice (AJ) and orange juice (OJ). This individual has a constant marginal rate of substitution of orange juice for apple juice equal to 3, with apple juice drawn on the vertical axis. Consumption bundle A contains 6 glasses of apple juice and 5 glasses of orange juice per week. Consumption bundle B contains 3 glasses of apple juice and 6 glasses of orange juice per week. Which of the following statements are necessarily true? 1. The consumer prefers bundle A to B. 2. The consumer prefers bundle B to A. 3. The consumer is indifferent between bundles A and B. 4. We cannot tell without knowing the price of apple juice and the price of orange juice. 5. The consumer is not maximising utility.
Consider an individual with preferences over apple juice (AJ) and orange juice (OJ). This individual has a constant marginal rate of substitution of orange juice for apple juice equal to 3, with apple juice drawn on the vertical axis. Consumption bundle A contains 6 glasses of apple juice and 5 glasses of orange juice per week. Consumption bundle B contains 3 glasses of apple juice and 6 glasses of orange juice per week. Which of the following statements are necessarily true? 1. The consumer prefers bundle A to B. 2. The consumer prefers bundle B to A. 3. The consumer is indifferent between bundles A and B. 4. We cannot tell without knowing the price of apple juice and the price of orange juice. 5. The consumer is not maximising utility.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
Related questions
Question
Transcribed Image Text:Consider an individual with preferences over apple
juice (AJ) and orange juice (OJ). This individual has a
constant marginal rate of substitution of orange juice
for apple juice equal to 3, with apple juice drawn on
the vertical axis. Consumption bundle A contains 6
glasses of apple juice and 5 glasses of orange juice
per week. Consumption bundle B contains 3 glasses
of apple juice and 6 glasses of orange juice per week.
Which of the following statements are necessarily
true?
1. The consumer prefers bundle A to B.
2. The consumer prefers bundle B to A.
3. The consumer is indifferent between bundles A
and B.
4. We cannot tell without knowing the price of apple
juice and the price of orange juice.
5. The consumer is not maximising utility.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc