Individuals derive utility from picnics, p, and kayak trips, k. Assumi
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual’s utility is U(p,k) = k0.5p0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips?
A) MRS = 1.
B) MRS = -1.
C) MRS = -1/2
D) There is no substitution because picnics and kayak trips are perfect complements.
ANSWER
B
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