On an indifference map, clothing costs $5 per unit and is represented on the vertical axis and food costs $5 per unit and is represented on the horizontal axis. The price of food falls because good weather creates a bumper harvest. If, at the new satisfaction maximizing market basket, the marginal rate of substitution is 3/5, what is the new, lower price of food?

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     There is not enough information given to answer this question.
      $3.00
      $4.00
      $3.50
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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$3.00
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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