The marginal rate of substitution is
A)the slope of a budget constraint.
B)always constant.
C)the slope of an indifference curve.
D)the point at which the budget constraint and the indifference curve are tangent.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) is the rate at which a consumer is willing to exchange one good for another while remaining indifferent to the change in satisfaction level. It is measured as the slope of an indifference curve, which shows combinations of goods that provide the same level of utility to the consumer. Thus, the correct choice is C - the slope of an indifference curve.

The Marginal Rate of Substitution Is