Fill in the blanks below with either “good X”

or “good Y,” where good X is measured on the x -axis and good Y is measured on the y -axis.

a. If the price of is $8 and the price of is $12, then the price ratio (also the slope of the budget constraint) is 1.5.

b. A price ratio of 1.5 means that the consumer is able to trade 1 unit of for 1.5 units of . ph56

c. If another unit of would give a consumer 20 extra units of utility, and another unit of would give a consumer 10 extra units of utility, then the marginal rate of substitution for this consumer is equal to 2.

d. A marginal rate of substitution of 2 means that, from the consumer’s point of view, 1 more unit of is as good as 2 more units of .

e. If the price ratio is 1.5 and the marginal rate of substitution is 2, then the market values more than the consumer does, and the consumer values more than the market does. In this case, the consumer ought to buy less of and more of .