Question

Pizza and pepsi are complements. Suppose that at current consumption level of 4 pizzas and 3 pepsis, an individual’s marginal utility of consuming an extra pizza is 12 whereas the marginal utility of consuming an extra pepsi is 3. Then the MRS of pepsi for pizza (that is, the number of pizzas the individual is willing to give up to get one more pepsi) is...

(a) 3 (b) 4 (c) 1/3 (d) 1/4 ?

Answer 1

The MRS would be the equivalente to MUpizza/MUpepsi, that is 12/3=4.

Step-by-step explanation:

The MRS shows the amount that the consumer would give up of the good X (pizza) to consume the good Y (pepsi). Therefore, the MRS of 4, shows that the consumer would give up 4 pizzas to consume an extra pepsi.