At any point on an indifference curve, the slope indicates
A)the market rate of substitution between the two goods.
B)the way the consumer's budget is allocated between the two goods.
C)how the total satisfaction of the consumer changes with different market baskets.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

The slope of an indifference curve represents the marginal rate of substitution (MRS) between two goods, which is not the same as the market rate of substitution. The MRS indicates the rate at which a consumer is willing to trade one good for another while maintaining the same level of satisfaction, not how the budget is allocated or how total satisfaction changes.

At Any Point on an Indifference Curve, the Slope Indicates