Two goods are perfect substitutes. The marginal rate of substitution for these two goods is:
A)parabolic.
B)exponential.
C)a constant.
D)shows diminishing marginal utility.

Question

Quizplus · Accepted Answer

The marginal rate of substitution for two perfect substitutes is constant, as the consumer is willing to give up a specific amount of one good in exchange for a specific amount of the other good, regardless of the quantity consumed. Therefore, the answer is C) a constant. Perfect substitutes have a constant marginal rate of substitution, meaning that consumers are willing to trade one good for the other at a constant ratio. This is because the two goods provide the same level of satisfaction and are interchangeable.

Two Goods Are Perfect Substitutes