Intuitively,the marginal rate of substitution for X with Y does not tell us
A) How much Y a consumer needs to compensate them for a little less X
B) How much X must be taken away from a consumer to compensate them for an increase in Y
C) How much X a consumer needs to compensate them for a little less Y
D) How much more Y the consumer will buy if the price of Y increases

Question

Quizplus · Accepted Answer

The marginal rate of substitution for X with Y tells us how much of Y the consumer is willing to give up for a unit increase in X, or how much of X the consumer is willing to give up for a unit increase in Y. It does not tell us about the consumer's willingness to pay for the goods or the effect of price changes on the consumer's demand. Therefore, option D is the best choice as it relates to the effects of price changes on consumer demand.

Intuitively,the Marginal Rate of Substitution for X with Y Does