Figure 10-4

-Refer to Figure 10-4.What is the marginal rate of substitution for one bar of chocolate between h and j?

Question

Figure 10-4
 
-Refer to Figure 10-4.What is the marginal rate of substitution for one bar of chocolate between h and j?

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade-off one good for another while maintaining the same level of utility. In this case, the MRS between h and j is the amount of cookies (y-axis) a consumer is willing to give up for one bar of chocolate (x-axis). Moving from point h to j, the consumer is willing to give up 1/4 of a cookie for one more bar of chocolate. Therefore, the best choice is B, which represents the point where the budget constraint is tangent to the highest indifference curve. At this point, the consumer is maximizing their utility given their budget and the prices of the goods.

Figure 10-4 -Refer to Figure 10-4.What Is the Marginal Rate of Substitution