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8 September, 07:35

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).

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  1. 8 September, 07:53
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    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
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