If you are willing to give up 15 units of good A (on the vertical axis) for 5 units of good B (on the horizontal axis) and your level of satisfaction is unchanged, the marginal rate of substitution of B for A is:
A)2.
B)3.
C)5.
D)10.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures how much of one good a consumer is willing to give up to acquire an additional unit of another good while maintaining the same level of utility.

In this case, the consumer is willing to give up 15 units of good A for 5 units of good B without any change in satisfaction. This means that the consumer is willing to trade 3 units of good A for 1 unit of good B (15/5 = 3). Therefore, the marginal rate of substitution of B for A is 3.

So, the best choice is B.

If You Are Willing to Give Up 15 Units of Good