Answer to Question #101321 in Microeconomics for JP

Question

A reporter from the magazine Survey Mania recently conducted a poll of a group of randomly selected consumers leaving Extra Foods after completing their week’s grocery shopping. To the reporter’s surprise, even though consumers (who eat meat) had different preferences, their marginal rates of substitution (MRS) of chicken for beef were found to be identical. Use a budget line-indifference curve diagram(s) to explain why this was true. (Hint: To keep your diagram(s) as clear as possible, you need only graph two people, one who likes chicken relatively more than beef and one who likes beef relatively more than chicken. For simplicity, assume that the two consumers have equal income. Also assume that both consumers have preferences that fall under the “typical” category, though as mentioned above, their preferences are not identical.)

Answer 1

If one consumer likes chicken relatively more than beef and the second consumer likes beef relatively more than chicken, then if they have equal income, then the first consumer will buy more chicken and less beef, and the second consumer will buy less chicken and more beef. As a result the total consumption of beef and chicken will be equal or almost equal, that's why their marginal rates of substitution (MRS) of chicken for beef will be found to be identical.