Figure 21-8

-Refer to Figure 21-8. What is the consumer's marginal rate of substitution as she moves from A to B?
A)4
B)2
C)1
D)0.5

Question

Figure 21-8  ​
​
-Refer to Figure 21-8. What is the consumer's marginal rate of substitution as she moves from A to B?
A)4 
B)2 
C)1 
D)0.5

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility. It is calculated by taking the absolute value of the slope of the indifference curve. Moving from point A to point B, the consumer gives up 2 units of Good Y to gain 1 unit of Good X, so the MRS is 2.

Figure 21-8 ​

Figure 21-8