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Brilliant_brown [7]
3 years ago
12

Imagine that two goods are available to you: apples (X) and pears (Y). You like apples half as much as pears. If your fruit budg

et is $100 per month, the price of apples is $2 per pound, and the price of pears is $4 per pound, what is the value of the MktRS (market rate of substitution)?
Business
1 answer:
goldenfox [79]3 years ago
3 0

Answer:

the value of the MktRS (market rate of substitution) is 0

Explanation:

The computation of the market rate of substitution is shown below:

Since it is mentioned that

You like apples half as pears

So the equation would be

X = 1 ÷ 2 Y

X ÷ Y = 1 ÷ 2

Now the market rate of substitution of the price is

= $2 ÷ $4

= 1 ÷ 2

So,

= 1 ÷ 2 - 1 ÷ 2

= 0

Hence, the value of the MktRS (market rate of substitution) is 0

The same is to be considered

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