Wendy01

Exercise Problems:
1. Partial information on three baskets (1, 2 and 3) containing goods A and B is given in the table below. The marginal rate of substitution of B for A, (MRSBA), at basket 2 is also provided. Basket Unit of A Units of B MRSBA 1 30 2 50 35 4.0 3 40 40 A consumer claims that he is indifferent between baskets 2 and 3 and his indifference curves. If he is also indifferent between basket 1 and 3, the number of the units of A in basket 1 is most likely: A. Equal to 60 B. Less than 60 C. Greater than 60		Ans: C; the three baskets are in the same indifference curve, MRSBA is 4.0. so So the unit of A in basket 1 is greater than 60