The marginal rate of substitution is equal to the ________.
A) marginal cost of each good
B) magnitude of the slope of the indifference curve
C) inverse of the slope of the budget line
D) relative price of the two goods

Question

Quizplus · Accepted Answer

The marginal rate of substitution measures the rate at which a consumer is willing to trade off one good for another while remaining at the same level of utility. It is equal to the magnitude of the slope of the indifference curve, indicating how much of one good a consumer is willing to give up for an additional unit of another good. The other options (A, C, D) do not directly measure the marginal rate of substitution.

The Marginal Rate of Substitution Is Equal to the ________