Irrespective of whether she is at her optimum, Jenna's valuation of coffee relative to orange juice can be measured by
A)her marginal rate of substitution between coffee and orange juice.
B)the price of coffee relative to the price of orange juice.
C)the ratio of the quantity of coffee that she buys relative to the quantity of orange juice that she buys.
D)the ratio of the quantity of coffee supplied in the market to the quantity of orange juice supplied in the market.

Question

Quizplus · Accepted Answer

Jenna's valuation of coffee relative to orange juice can be measured by her marginal rate of substitution between coffee and orange juice. Marginal rate of substitution (MRS) is the amount of one good that a consumer is willing to give up to obtain one more unit of another good, while remaining indifferent between the two goods. Therefore, her MRS between coffee and orange juice will indicate the relative value that she places on each good.

Irrespective of Whether She Is at Her Optimum, Jenna's Valuation