The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point C equals
A) 4.
B) 8.
C) 2.
D) 1/2.
E) More information is needed to calculate the MRS.

Question

The figure above shows one of a consumer's indifference curves.
-The marginal rate of substitution (MRS)at point C equals
A) 4. 
B) 8. 
C) 2. 
D) 1/2. 
E) More information is needed to calculate the MRS.

Quizplus · Accepted Answer

The MRS measures the rate at which a consumer is willing to give up one good in exchange for another good while remaining at the same level of utility. To calculate the MRS at a point on an indifference curve, we need to find the absolute value of the slope of the indifference curve at that point. At point C, the slope of the indifference curve is -1/2. Taking the absolute value of this slope gives 2, which is the MRS at point C. Therefore, the answer is C) 2.

The Figure Above Shows One of a Consumer's Indifference Curves