If another unit of Good X gives a consumer 15 additional units of satisfaction, and another unit of Good Y gives 45 additional units of satisfaction, the MRS is equal to 1/3.

Question

Quizplus · Accepted Answer

MRS (Marginal Rate of Substitution) is the amount of one good that a consumer is willing to give up in order to obtain an additional unit of another good while keeping the same level of satisfaction. In this case, the MRS is equal to the ratio of the additional satisfaction from Good Y to the additional satisfaction from Good X, which is (45/1)/(15/1) = 3. Therefore, the statement is true and the answer is A.

If Another Unit of Good X Gives a Consumer 15