Multiple Choice
Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese.The price of one pound of cheese is $6 and the price of a bottle of wine is $10.The consumer should
A) increase consumption of cheese and decrease consumption of wine, and move to a lower indifference curve.
B) increase consumption of cheese and decrease consumption of wine, and move to a higher indifference curve.
C) increase consumption of wine and decrease consumption of cheese, and move to a higher indifference curve.
D) increase consumption of cheese and decrease consumption of wine, and remain on the same indifference curve.
Correct Answer:

Verified
Correct Answer:
Verified
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