The marginal rate of substitution is defined as
A) the amount of good Y substituted for good X by a consumer.
B) the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction.
C) the feasible rate of substitution given prices.
D) the slope of the utility function.
E) the convexity of the indifference curve.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility, or satisfaction. It is calculated as the ratio of the change in the quantity of one good to the change in the quantity of another good as a consumer moves along an indifference curve. Therefore, option B correctly defines MRS as the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction.

The Marginal Rate of Substitution Is Defined as