Questions: Rashid buys only books and albums. The figure shows his preferences. When Rashid chooses the consumption point of 9 books and 2 albums, his marginal rate of substitution is book(s) per album.

Rashid buys only books and albums. The figure shows his preferences. When Rashid chooses the consumption point of 9 books and 2 albums, his marginal rate of substitution is book(s) per album.

Transcript text: Rashid buys only books and albums. The figure shows his preferences. When Rashid chooses the consumption point of 9 books and 2 albums, his marginal rate of substitution is $\square$ book(s) per album.

Solution

Solution Steps

Step 1: Find the indifference curve passing through (2,9)

The indifference curve passing through the consumption point with 2 albums and 9 books is the one labeled $I_0$.

Step 2: Draw the tangent line at (2,9)

Imagine a line tangent to the indifference curve $I_0$ at the point (2,9).

Step 3: Calculate the slope of the tangent line

The tangent line passes roughly through the points (0, 15) and (5,0). The slope of this line is approximately (0-15)/(5-0) = -3.

Final Answer: The marginal rate of substitution is 3.

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