What does the marginal rate of substitution measure?
A)It measures the rate at which a consumer must give up one good to purchase another good.
B)It measures the rate at which a consumer will substitute one good for another when the price of one good changes.
C)It measures the change in utility from consuming one additional unit of a good.
D)It measures the rate at which a consumer is willing to trade off one product for another while keeping utility constant.

Question

Quizplus · Accepted Answer

The marginal rate of substitution measures the rate at which a consumer is willing to trade off one product for another while keeping utility constant. In other words, it measures how many units of one good a consumer is willing to give up to obtain one more unit of another good while maintaining the same level of satisfaction.

What Does the Marginal Rate of Substitution Measure