Fill in the blanks with either “good X” or “good Y,” where good X is measured on the x-axis and good Y is measured on the y-axis (vertical axis).
a. If the price of ____ is $8, and the price of ____ is $12, then the price ratio (also the slope of the budget constraint) is 1.5.
b. A price ratio of 1.5 means that the consumer is able to trade 1 unit of ____ for 1.5 units of ____.
c. If another unit of ____ would give a consumer 20 extra units of utility, and another unit of ____ would give a consumer 10 extra units of utility, then the marginal rate of substitution for this consumer is equal to 2.
d. A marginal rate of substitution of 2 means that, from the consumer’s point of view, 1 more unit of ____ is as good as 2 more units of ____.
e. If the price ratio is 1.5, and the marginal rate of substitution is 2, then the market values ____ more than the consumer does, and the consumer values ____ more than the market does. In this case, the consumer ought to buy less of ____ and more of ____.