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Figure 21-7 The following graph shows three possible indifference curves (I) for a consumer. A graph of donuts versus cake shows 3 curved lines, falling
Figure 21-7 The following graph shows three possible indifference curves (I) for a consumer. A graph of donuts versus cake shows 3 curved lines, falling from left to right, as follows, from left to right. Indifference Curve 1, Indifference Curve 2, and Indifference Curve 3. Point D lies on Indifference Curve 1, below all other points but to the right of Point C. Points A, B, and C lie on Indifference Curve 2, from top to bottom. Point E lies on Indifference Curve 3, above all other points but to the right of Point A. Refer to Figure 21-7. Which of the following comparisons is correct regarding the marginal rate of substitution (MRS) of donuts for cake? a. The MRS is greater between bundles E and B than between bundles B and D. b. The MRS is greater between bundles B and C than between bundles A and B. c. The MRS is greater between bundles A and B than between bundles B and C. d. The MRS is the same between bundles A and B and bundles B and C because all three bundles lie on the same indifference curve
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