A consumer has $140 in monthly income to be spent on two goods Z and B. The price of good Z (Pz ) is $6.00. The Marginal Rate of Transformation (MRT) is equal to minus2. That is 2 units of good B can be traded for 1 unit of good Z. What is the price of good B? $ nothing (round your answer to the nearest penny). How many units of good B can be purchased if all income is used for that good? nothing units (round your answer to two decimal places).

Question

Damian Arroyo

Business

10 November, 15:59

A consumer has $140 in monthly income to be spent on two goods Z and B. The price of good Z (Pz ) is $6.00. The Marginal Rate of Transformation (MRT) is equal to minus2. That is 2 units of good B can be traded for 1 unit of good Z. What is the price of good B? $ nothing (round your answer to the nearest penny). How many units of good B can be purchased if all income is used for that good? nothing units (round your answer to two decimal places).

+2

Answers (1)

Know the Answer?

Caiden Frey · Answer 1

3 and 46.67 units

Explanation:

The formula and the computations are shown below:

The price of good B is

= {The price of good Z (Pz) } : {Marginal rate of transformation}

= {$6} : {2}

= 3

Now the number of units to be purchased for all income used is

= (Monthly income spent on two goods) : (price of good B)

= ($140) : (3)

= 46.67 units

By applying the above formula we can find out the price of good B and the number of units purchased