The marginal rate of substitution represents the maximum amount of one commodity a consumer is willing to give up in exchange for one more unit of another commodity.

Question

Quizplus · Accepted Answer

This statement is true. The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade off one good for another while still remaining indifferent. It represents the slope of the indifference curve at a particular point. The steeper the slope, the higher the MRS, indicating a greater willingness to substitute one good for another.

The Marginal Rate of Substitution Represents the Maximum Amount of One