Answer to Question #296634 in Microeconomics for LALA

Question

Given that income is $500 and P X = $20 and P Y = $5, what is the market rate of

substitution between goods X and Y? Show solutions.

Answer 1

Given,

$P_x=20\\P_y=5$  

The market rate of substitution between goods  $x$ and $y$ is given by, $-{P_x\over P_y}=-{20\over5}=-4$

The required market rate of substitution is -4.