At any point on an indifference curve for an individual consuming two goods, A and B, with A on the vertical axis and B on the horizontal axis, the slope is equal to A)MU_A/MU_B. B)MU_B/MU_A. C)-MU_A/MU_B. D)-MU_B/MU_A. E)-P_B/P_A.

Question

Quizplus · Accepted Answer

The slope of an indifference curve is equal to the marginal rate of substitution (MRS), which is the rate at which a consumer is willing to trade one good for another while remaining on the same level of satisfaction. The MRS is equal to the ratio of the marginal utility of the first good to the marginal utility of the second good.

At Any Point on an Indifference Curve for an Individual