Higher rates of substitution are indicated by _______ _______ values of the marginal rate of substitution.
A) Small negative
B) Large negative
C) Small positive
D) Large positive

Question

Quizplus · Accepted Answer

Higher rates of substitution indicate that consumers are willing to trade-off larger amounts of one good for another. This is reflected in higher values of the marginal rate of substitution, which measures the amount of one good a consumer is willing to give up for another while keeping utility constant. Therefore, the best choice is D, large positive values for the marginal rate of substitution.

Higher Rates of Substitution Are Indicated by _______ _______ Values

Higher Rates of Substitution Are Indicated by _ _ Values