The marginal rate of substitution
A)can only be computed if we know the prices of all goods.
B)can be deduced from the budget line.
C)cannot be deduced from the properties of the indifference curve.
D)can be computed by measuring the curvature of the indifference curve.
E)can be computed by measuring the slope of the indifference curve.

Question

Quizplus · Accepted Answer

The marginal rate of substitution refers to the rate at which a consumer is willing to exchange one good for another while remaining indifferent in terms of utility. It can be computed by measuring the slope of the indifference curve, which represents different combinations of goods that provide the same level of utility. Therefore, choice E is the best answer.

The Marginal Rate of Substitution