CFA Latest CFA Level 1 Discussions Query on a question in module

Query on a question in module

  • This topic has 1 reply, 2 voices, and was last updated Apr-17 by Swift.
  • Author
    Posts
    • aanchalb
      Participant
      Up
      0
      Down

      In econ module, reading 14, question 4
      “4. If a consumer’s marginal rate of substitution of good X for good Y (MRSXY) is equal to 2, then the:
      A. consumer is willing to give up 2 units of X for 1 unit of Y. B. slope of a line tangent to the indifference curve at that point is 2. C. slope of a line tangent to the indifference curve at that point is –2.”
      Why is A not the correct answer?

    • Swift
      Participant
      Up
      4
      Down

      Its yet another example of economists being backwards. MRS(XY) = Delta(Y)/Delta(X) so is the number of units of good Y that they will give up for an additional unit of good X.

Viewing 1 reply thread
  • You must be logged in to reply to this topic.