The marginal rate of substitution for the good on the horizontal axis is
A) the consumer surplus.
B) the same as the consumer's budget line.
C) equal to the magnitude of the slope of the indifference curve.
D) equal to the magnitude of the slope of the consumer surplus curve.
E) equal to 1.0 if the indifference curves are linear.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade one good for another while remaining indifferent to the level of satisfaction. It is calculated as the magnitude of the slope of the indifference curve. Therefore, the correct option is C. Options A, B, and D are incorrect because they do not relate to the concept of MRS. Option E is incorrect because the linearity of the indifference curves does not determine the MRS value.

The Marginal Rate of Substitution for the Good on the Horizontal