Katie likes sushi (S) and soy milk (M). Her indifference curves are bowed in and toward the origin and do not intersect the axes. The price of sushi is $10 and the price of soymilk is $2. She is spending all her income at the basket she is currently consuming, and her marginal rate of substitution of sushi for soy milk is 4. Is she at an optimum? If so, show why. If not, should she buy less sushi and more soy milk, or the reverse? Solution MRS=Ps/Pm (at optimum ) But MRS=4 , Ps/Pm = 10/2=5 MRS = 4 < (Ps/Pm) = 5 No, She isn\'t at an optimum because MRS<Ps/Pm. She should buy less sushi(s) and buy more soymilk(m) in order to get to optimum point. .