The marginal rate of substitution is
A) the change in the quantity of one good that just offsets a one unit change in the consumption of another such that the total satisfaction remains constant.
B) the additional satisfaction from consuming an additional unit of a good or service.
C) positively related to the level of income.
D) the set of goods and services that are available to the consumer given his income.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade off one good for another while maintaining the same level of satisfaction. Specifically, it is defined as the amount of one good a consumer is willing to give up, or forego consuming, in order to obtain an additional unit of another good while keeping the overall level of happiness (utility) constant.

The Marginal Rate of Substitution Is