Answer:
Option C is correct
Step-by-step explanation:
If his MRS of pencils for pens is 3, this means that, instead of buying 3 pens, he could have built just 1 pencil, which is much cheaper apparently (3 pens cost 150 cents, and one pencil just 10). Thus, he can increase his utility by buying more pencils and less pens. Option C is the correct one.
MRS is simply the quantity of a particular good, a customer is willing to consume relative to another good.
The true statement is (c) Jack could increase his utility by buying more pencils and fewer pens
From the question, we have:
[tex]\mathbf{Pencil = \$0.10,1}[/tex]
[tex]\mathbf{Pen = \$0.50,5}[/tex]
[tex]\mathbf{MRS = 3}[/tex]
The MRS means that, he can buy 3 more pencils at the expense of pens.
By comparison, 3 pencils is greater than 1 pencil.
This means that, he can still buy more pencils.
Hence, the true statement is option (c)
Read more about Marginal Rate of Substitution at:
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