The absolute value of the marginal rate of substitution measures the:
A) slope of the budget constraint.
B) slope of an indifference curve.
C) relative price of two goods.
D) optimality of consumer consumption.

Question

Quizplus · Accepted Answer

The absolute value of the marginal rate of substitution (MRS) is equal to the slope of an indifference curve. It represents the amount of one good a consumer is willing to give up to get one more unit of another good while remaining indifferent (equally happy) between different consumption bundles. Therefore, choice B is correct, while choices A, C and D are incorrect.

The Absolute Value of the Marginal Rate of Substitution Measures