The marginal rate of substitution is the
A) rate at which the consumer will give up one good for an additional unit of the other good, such that total satisfaction is constant.
B) rate at which the consumer can trade one good for the other in the marketplace.
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 amount of one good a consumer is willing to give up for an additional unit of another good while maintaining the same level of satisfaction. It measures the relative value of one good in terms of another and shows the consumer's preferences between two goods. It is not the same as the marginal utility of a good, which measures the additional satisfaction received from consuming one more unit of a good. The MRS can be used to derive the consumer's demand function or indifference curves.

The Marginal Rate of Substitution Is the