section6 - Department of Economics University of California...

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Department of Economics University of California, Berkeley Econ 100A, Sections 104 and 108 GSI: Ana Rocca Section 6 1 Examples 1.1 Finish up on example from last section Molly loves hamburgers and soft drinks, but insists on consuming exactly one soft drink for every two hamburgers that she eats. Molly has a budget of 100, the price of soft drinks is $2 and the price of hamburgers is $4. How many hamburgers and soft drinks does Molly consume? 1.2 MRS Whose MRS is higher? Who values avocados more? Consumers in Georgia pay twice as much for avocados as they do for peaches. However, avocados and peaches are the same price in California. If consumers in both states maximize utility, will the MRS of avocadoes for peaches be the same for consumers in both states? If not, which will be higher? (assuming they consumer positive quantities of both. True or False: The MRS diminishes as an individual moves downward along the demand curve.
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