The marginal rate of substitution between two goods is given by:
A) the inverse of the slope of an indifference curve.
B) the slope of a line tangent to an indifference curve.
C) negative one times the inverse of the slope of an indifference curve.
D) negative one times the slope of a line tangent to an indifference curve.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is defined as the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility. It is represented graphically by the slope of the indifference curve at any point, which is a tangent line to that point. Since indifference curves slope downwards from left to right, the slope is negative, making the correct answer "negative one times the slope of a line tangent to an indifference curve."

The Marginal Rate of Substitution Between Two Goods Is Given