Question

Assume that Jim is a rational consumer who consumes only two goods, apples (A) and nuts (N).Assume that his marginal rate of substitution of apples for nuts is given by the following formula: MRS= MUN/MUA= A/N That is, Jim’s MRS is equal to the ratio of the number of apples consumed to the number of nuts consumed. a. Assume that Jim’s income is $100, the price of nuts is $5, and the price of apples is $10. What quantities of apples and nuts will he consume? b. Find two additional points on his demand curve for nuts (PN = $10 and PN = $2). c. Sketch one of the equilibrium points on an indifference curve graph​

Answer 1

Explanation:

Assume that Jim is a rational consumer who consumes only two goods, apples (A) and nuts (N).Assume that his marginal rate of substitution of apples for nuts is given by the following formula: MRS= MUN/MUA= A/N That is, Jim’s MRS is equal to the ratio of the number of apples consumed to the number of nuts consumed. a. Assume that Jim’s income is $100, the price of nuts is $5, and the price of apples is $10. What quantities of apples and nuts will he consume? b. Find two additional points on his demand curve for nuts (PN = $10 and PN = $2). c. Sketch one of the equilibrium points on an indifference curve graph.