Question

Jon is always willing to trade one can of coke for one can of sprite, or one can of sprite for one can of _______. What can you say about Jon's marginal rate of substitution?

1) Coke
2) Pepsi
3) Fanta
4) Dr. Pepper

Answer 1

Jon's marginal rate of substitution between Coke and Sprite is 1:1, indicating equal valuation of both sodas, which allows him to trade one for the other interchangeably.

Step-by-step explanation:

Jon is always willing to trade one can of coke for one can of sprite, or one can of sprite for one can of coke. What can you say about Jon's marginal rate of substitution? That he values Coke and Sprite equally and has a marginal rate of substitution of 1:1, meaning he would be willing to substitute one for the other at no additional benefit or cost.