Mika's marginal rate of substitution of apples (A) for oranges (O) is 5 (MRS_AO = 5). This information implies that: A) Mika is willing to trade away five apples for one more orange, holding her utility constant. B) Mika will move to a higher indifference curve if she trades away five apples for one more orange. C) Mika should own five times as many apples as oranges. D) the slope of the indifference curve is five and thus upward sloping.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) indicates the rate at which a consumer is willing to substitute one good for another while keeping their level of utility constant. In this case, an MRS of 5 means Mika is willing to give up 5 apples to obtain one additional orange without changing her overall satisfaction, which is what option A describes.

Mika's Marginal Rate of Substitution of Apples (A) for Oranges