The marginal rate of substitution is the
A) rate at which the consumer can exchange one good for the other.
B) change in the quantity of one good that just offsets a one-unit change in the consumption of another good such that the total satisfaction remains constant.
C) change in the quantity of one good that changes the utility received by one unit.
D) same thing as the marginal utility of a good.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of utility. It represents the slope of the indifference curve and measures the trade-off between two goods. It is the amount of one good that a consumer is willing to give up for an additional unit of another good. Therefore, the correct option is B. Choices A, C and D do not correctly define the concept of marginal rate of substitution.

The Marginal Rate of Substitution Is the