Final answer:
The marginal rate of substitution of food and clothes is the rate at which a consumer is willing to trade off food for clothes while keeping their level of satisfaction constant. It is influenced by both the marginal utility of each good and their relative prices under a given budget constraint.
Step-by-step explanation:
The marginal rate of substitution (MRS) of two goods, such as food and clothes, is the rate at which a consumer is willing to give up some amount of one good (food) in exchange for another good (clothes), while maintaining the same level of utility. In the context of a budget constraint, as the total price of the two goods remains constant and the ratio of the prices does not change, the MRS is influenced by the changing marginal utility that each good provides as their quantities vary. For example, at the optimal consumption point, if we consider an example with T-shirts and movies instead, the ratio match of marginal utility to price for T-shirts and movies is necessary for optimal consumption. Similarly, when regarding the scenario with haircuts and personal pizzas, as described in Figure B4, if haircuts cost $20, personal pizzas cost $6, and a consumer like Ogden has $120 to spend, the MRS will be impacted by both the relative prices of these goods and the marginal utilities derived from each.