The marginal rate of substitution between two goods equals the
A) marginal utility of one divided by the marginal utility of the other.
B) marginal utility of one times the marginal utility of the other.
C) marginal cost of one times the marginal cost of the other.
D) price of one good divided by the price of the other.

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. It is represented by the ratio of the marginal utility of one good to the marginal utility of the other. Therefore, the correct choice is A, as it represents the correct calculation of MRS.

The Marginal Rate of Substitution Between Two Goods Equals the