Question: Lorna consumes cans of anchovies A and boxes of biscuits
Lorna consumes cans of anchovies, A, and boxes of biscuits, B. Each of her indifference curves reflects strictly diminishing marginal rates of substitution. If A = 2 and B = 2, her marginal rate of substitution between cans of anchovies and boxes of biscuits equals – 1(= MUA / MUB). Will she prefer a bundle with three cans of anchovies and a box of biscuits to a bundle with two of each? Why?
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