Figure 3.1.4
-Refer to Figure 3.1.4 above. The value of the marginal rate of substitution between points B and D is:
A) -4
B) -0.25
C) 10
D) 6

Question

Figure 3.1.4
-Refer to Figure 3.1.4 above. The value of the marginal rate of substitution between points B and D is:
A) -4 
B) -0.25 
C) 10 
D) 6

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is calculated as the absolute value of the slope between two points on an indifference curve. Between points B and D, the slope is calculated as the change in Y divided by the change in X. Without the specific figure, we typically assume a negative slope due to the law of diminishing marginal utility, which implies that as one moves from B to D, they are willing to give up less of one good to get more of another, resulting in a negative value. Given the options, -4 is a plausible value for MRS, reflecting a negative slope and a trade-off rate between the two goods.

Figure 3.1.4 -Refer to Figure 3.1.4 Above. the Value of the Marginal