The slope of an indifference curve reveals:
A) that preferences are complete.
B) the marginal rate of substitution of one good for another good.
C) the ratio of market prices.
D) that preferences are transitive.
E) none of the above

Question

Quizplus · Accepted Answer

The slope of an indifference curve represents the marginal rate of substitution (MRS) of one good for another good. MRS is the maximum amount of one good that a consumer is willing to give up in order to obtain an extra unit of another good while still remaining indifferent between the two consumption bundles. In other words, it is the rate at which a consumer is willing to trade off one good for another. Therefore, option B is the correct answer.

The Slope of an Indifference Curve Reveals