The "Marginal Rate of Substitution" Between Two Goods Is Measured

question 17

Multiple Choice

The "marginal rate of substitution" between two goods is measured by:

• A)the ratio of the market prices of the two goods.
• B)the number of units of a good consumed divided by the market price of the other good.
• C)the number of units of one good a consumer would give up to consume one more unit of another good, while holding total utility constant.
• D)the consumer's budget constraint divided by the price of each good.

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Definitions:

Equilibrium

A state where market supply and demand balance each other, and as a result, prices become stable.

Opportunity Cost

The expense associated with sacrificing the second-best choice in the decision-making process.

Dentist

A healthcare professional specializing in the diagnosis, prevention, and treatment of diseases and conditions of the oral cavity.

Leisure

Free time available to an individual after commitments to work, school, or other necessary activities, often used for rest, recreation, or other personal activities.