Multiple Choice
Use the following to answer questions:
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50.
-(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If Owen consumes 1.5 pizzas and 100 sodas, which of the following describes the relationship between his marginal rate of substitution of pizza for soda and the price of pizza in terms of soda?
A) The marginal rate of substitution equals the relative price.
B) The marginal rate of substitution is greater than the relative price.
C) The marginal rate of substitution is less than the relative price.
D) It is impossible to determine, given the information available.
Correct Answer:

Verified
Correct Answer:
Verified
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