The marginal rate of substitution is equal to the
A)slope of the indifference curve.
B)ratio of the prices of the two goods.
C)slope of the budget constraint.
D)All of the above are correct.

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 between the two. This rate is measured by the slope of the indifference curve, which shows all the possible combinations of two goods that yield the same level of satisfaction or utility to the consumer. The other options, ratio of prices and slope of budget constraint, are important concepts in consumer theory but do not directly measure MRS.

The Marginal Rate of Substitution Is Equal to the