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Fred loves tomatoes. He makes soups, sauces, and stews with them; stuffs them; roasts them; and grills them. Fred has discovered a farmer’s market where the price of a bushel of tomatoes depends on how many bushels are purchased. The first bushel is $15; the second, $12; the third, $10; and four or more, $9 each. Fred has $82 to spend on tomatoes and on “all other things” during the coming week. All other things sell for $1 per unit. Assume that all other things are measured on the vertical axis. What is Fred’s marginal rate of substitution if he chooses to buy 5 bushels of tomatoes?
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We grow wheat that sells for $40,000. The wheat is milled into flour that sells for $55,000. The flour is used to bake bread that sells to consumers for $90,000. Typically, a period where GDP is falling for at least 6 months is considered to be:
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