Suppose Abraham is indifferent between the following combinations of Apples and Oranges below: Combination Apple Oranges A 5 3 B 9 2 C 15 1 What is the marginal value of the 2nd orange in terms of apples?
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From combination A to B, Abraham gives up 4 apples (9-5) to get 3 more oranges (2-(-1)). So, the marginal value of an orange in this case is 4/3 apples. From combination B to C, Abraham gives up 6 apples (15-9) to get 1 more orange (1-2). So, the marginal value Show more…
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