At equilibrium,the marginal rate of substitution describes:
A) the slope of the budget constraint.
B) the number of units of one good that a consumer is willing to trade for an additional unit of another good, holding utility fixed.
C) the slope of the demand curve.
D) the number of units of one good that a consumer is willing to trade for an additional unit of another good in order to increase utility by 1 unit.
E) a and b

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility. It shows the number of units of one good that a consumer is willing to trade for an additional unit of another good, holding utility fixed. In other words, it describes the tradeoff that a consumer is willing to make between two goods.

At Equilibrium,the Marginal Rate of Substitution Describes