Question

Bart and Lisa are both optimizing consumers in the markets for shirts and hats, where they pay \(100 for a shirt \)50 for a hat. Bart buys 8 shirts and 4 hats, while Lisa buys 6 shirts and 12 hats. From this information, we can infer that Bart’s marginal rate of substitution is ___ hats per shirt, and while Lisa’s is __.

a. 2;1

b. 2;2

c. 4;1

d. 4;2

Short answer

The correct answer is option b) 2;2

Step-by-step solution

Explanation for the correct option

The marginal rate of substitution refers to the amount of good that a consumer is willing to give up for consuming another available good.The MRS helps analyze consumer behavior.

From the law of equi-marginal utilities

Thus, the marginal rate of substitution is the ratio of price of both the goods.

Given the price of the shirt is $100 and the price of a hat is $50.

The marginal rate of substitution from the above relation will be 2 for both Bart and Lisa.

The correct option will be (b) 2:2.