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IrinaK [193]
3 years ago
5

Consumers in Georgia pay twice as much for avocados as they do for peaches. However, avocados and peaches are equally priced in

California. If consumers in both states maximize utility, will the marginal rate of substitution of peaches for avocados be the same for consumers in both states? If not, which will be higher?
Business
1 answer:
Ugo [173]3 years ago
4 0

Answer: Explanation:

The marginal rate of substitution of peaches for avocados is the maximum amount of avocados that a  person is willing to give up to obtain one additional peach. When consumers maximize utility, they set their MRS equal  to the price ratio,  Pp/PA

where ,

P p  is the price of a peach and

PA is the price of an avocado.

In Georgia,  avocados cost twice as much as peaches, so the price ratio is ½ , but in California, the prices are the  same, so the price ratio is 1. Therefore, when consumers are maximizing utility (assuming they buy  positive amounts of both goods), the marginal rates of substitution will not be the same for consumers  in both states. Consumers in California will have an MRS that is twice as large as consumers in Georgia.

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Explanation:

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2- Correct.

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The following transactions were completed by Daws Company during the current fiscal year ended December 31:
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Answer:

Explanation:

The T account is presented below:

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The expenditure method is the most widely used approach for estimating GDP, which is a measure of the economy's output produced within a country's borders irrespective of who owns the means to production. The GDP under this method is calculated by summing up all of the expenditures made on final goods and services.

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Answer:

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