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 amount of one good a consumer is willing to give up in exchange for another good while still maintaining the same level of satisfaction. This means that the MRS represents the rate at which a consumer is willing to substitute one good for another. Therefore, the best choice is B, which correctly defines the 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