Question

Ambrose has an indifference curve with equation x2= 20 − 4 x 1/21. when ambrose is consuming the bundle (4, 16), his marginal rate of substitution is 25/4.

Answer 1

The Ambrose indifference curve may need double-checking as the equation could possibly suffer from entry error. Bundle consumption should have a 3/15 impact regardless of marginal rate. Therefore, it is likely human computational error accounting for the marginal substitution rate we are seeing. Also, the consumption bundle does not seem correct.