Answer to Question #190194 in Microeconomics for Tayyaba

Question

Consider the bundle 2 pizza and 8 coke. Label this point. What can you say about the slope of the indifference curve that passes through the point? (For example, is it bigger than, equal to, or smaller than -1?)

Answer 1

The Slope of IC curve is equal to the MRS (Marginal Rate of Substitution)

$MRS=\frac{sacrifice}{gain}$

$=\frac{8}{2}$

$=4$

The slope of the IC curve is therefore 4.

It is bigger than 1