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A Consumer Buys 12 Units of Entertainment and 84 Units

Question 4

Multiple Choice

A consumer buys 12 units of entertainment and 84 units of "all other things." The consumer's income elasticity of demand is greater than 1 for entertainment and less than 1 for all other things.If income increases by 10%,then the consumer's marginal rate of substitution at the utility-maximizing market bundle will:


A) increase.
B) decrease.
C) be equal to 1.
D) remain constant.
E) There is insufficient information to answer the question.

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