When the marginal rates of substitution differs across any two consumers,then:
A)mutually beneficial trade is possible between them.
B)the only way to make one consumer better off is to make the other worse off.
C)it is impossible to find a point that makes both worse off.
D)a mutual exchange between them will leave them worse off.

Question

Quizplus · Accepted Answer

When the marginal rates of substitution (MRS) differs between two consumers, it means that they have different preferences and values for goods and services. This creates an opportunity for mutually beneficial trade as they will value the same goods differently. For example, one consumer may value a good more than the other, and so they can trade for goods that they value more. Therefore, choice A is the correct answer.

When the Marginal Rates of Substitution Differs Across Any Two