-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination A to combination B is
A) 4:1.
B) 3:1.
C) 2:1.
D) 0.

Question

-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination A to combination B is
A) 4:1. 
B) 3:1. 
C) 2:1. 
D) 0.

Quizplus · Accepted Answer

The marginal rate of substitution is the rate at which Jane is willing to give up Good A in order to get one more unit of Good B. In this case, Jane is willing to give up 4 units of Good A in order to get one more unit of Good B, so the marginal rate of substitution is 4:1.

-Refer to the Above Table