Suppose Joe's MRS for cookies with crackers is 6 crackers per cookie. Also assume that Mary's MRS for cookies with crackers is 3 crackers per cookie. Assuming that these rates of substitution don't depend on the amounts consumed, which of the following trades would make both Joe and Mary better off?

A. Joe gives Mary 5 crackers in exchange for a cookie.

B. Joe gives Mary 2 crackers in exchange for a cookie.

C. Joe gives Mary 6 crackers in exchange for a cookie.

D. There is not enough information to answer the question.


A. Joe gives Mary 5 crackers in exchange for a cookie.

Economics

You might also like to view...

Jake is a corn farmer in Nebraska. He rents his land on a long-term lease for $250,000 a year. He pays his farm hands $128,000 a year

Is his rent a fixed cost or a variable cost? Are the wages he pays his workers a fixed cost or a variable cost? Briefly explain your answers.

Economics

There is an increase in the demand for cream when the price of coffee falls. Other things constant, we can conclude that coffee and cream are

A) substitute goods. B) inferior goods. C) independent goods. D) complementary goods.

Economics

Without money, the process of acquiring goods and services would be much more efficient.

Answer the following statement true (T) or false (F)

Economics

Which of the following does NOT describe the intended purpose of the antitrust laws of the United States?

A. to prohibit certain economic activities that promote trade B. to reduce the power of monopolies C. to promote competition within the economic system D. to restrict the formation of monopolies

Economics