A consumer is indifferent among these bundles of bananas and mangoes.
| Bundle | Bananas | Mangoes |
|---|---|---|
| P | 1 | 15 |
| Q | 2 | 11 |
| R | 3 | 8 |
| S | 4 | 6 |
| T | 5 | 5 |
Which of the following statements are correct?
(A) Bundle Q gives the consumer more satisfaction than bundle S.
(B) The consumer gives up 3 mangoes for the third banana.
(C) The MRS of bananas for mangoes from P to Q is 4.
(D) The MRS from S to T is 1.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B), (C) and (D) only
MRS is the number of mangoes she gives up for one more banana, staying equally well off.
(A) Bundle Q gives the consumer more satisfaction than bundle S. — Incorrect. She is indifferent among all five bundles, so they give the same satisfaction.
(B) The consumer gives up 3 mangoes for the third banana. — Correct. From Q to R, mangoes fall from 11 to 8: 3 mangoes.
(C) The MRS of bananas for mangoes from P to Q is 4. — Correct. Mangoes fall from 15 to 11 for one more banana: MRS = 4.
(D) The MRS from S to T is 1. — Correct. Mangoes fall from 6 to 5 for one more banana: MRS = 1. The MRS falls 4, 3, 2, 1: it diminishes.
NCERT (2026-27): “2.1.2 Ordinal Utility Analysis … All the points such as A, B, C and D lying on an indifference curve provide the consumer with the same level of satisfaction. It is clear that when a consumer gets one more banana, he has to forego some mangoes, so that her total utility level remains the same and she remains on the same indifference curve. Therefore, indifference curve slopes downward. The amount of mangoes that the consumer has to forego, in order to get an additional banana, her total utility level being the same, is called marginal rate of substitution (MRS). …” “… This tendency for the MRS to fall with increase in quantity of bananas is known as Law of Diminishing Marginal Rate of Substitution. This can be seen from figure 2.3 also. Going from point A to point B, the consumer sacrifices 3 mangoes for 1 banana, going from point B to point C, the consumer sacrifices 2 mangoes for 1 banana, and going from point C to point D, the consumer sacrifices just 1 mango for 1 banana. …” |