Which of the following statements about the marginal rate of substitution is NOT correct?
A) It measures the number of units of the good on the horizontal axis that a consumer must be compensated with to give up a unit of the good on the vertical axis, while remaining on the same indifference curve.
B) It is measured by the slope of the indifference curve.
C) It decreases in value when moving downward along a typical-shaped indifference curve.
D) It is constant for goods that are perfect substitutes.

Question

Quizplus · Accepted Answer

The marginal rate of substitution measures the number of units of the good on the vertical axis that a consumer must be compensated with to give up a unit of the good on the horizontal axis, not the other way around.

Which of the Following Statements About the Marginal Rate of Substitution