The maximum amount of one good a consumer would be willing to give up in order to obtain an additional unit of another is called the:
A) marginal rate of substitution.
B) marginal rate of utility exchange.
C) average rate of substitution.
D) marginal rate of exchange.

Question

Quizplus · Accepted Answer

The maximum amount a consumer would be willing to give up of one good to obtain another is known as the marginal rate of substitution (MRS). The MRS represents the slope of the indifference curve at a point and shows how much of one good the consumer is willing to give up for an additional unit of another good while remaining indifferent between the two bundles of goods.

The Maximum Amount of One Good a Consumer Would Be