Which of the Following Statements About the Marginal Rate of Substitution

question 37

Multiple Choice

Which of the following statements about the marginal rate of substitution is NOT correct?

• A) It measures the number of units of the good on the horizontal axis that a consumer must be compensated with to give up a unit of the good on the vertical axis, while remaining on the same indifference curve.
• B) It is measured by the slope of the indifference curve.
• C) It decreases in value when moving downward along a typical-shaped indifference curve.
• D) It is constant for goods that are perfect substitutes.

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Definitions:

Holder in Due Course

A legal term in commercial law for a person who has acquired a negotiable instrument in good faith and for value, and thus has certain protections.

Instrument

A formal document, such as a contract, will, or legal filing, that records and formalizes rights, obligations, or transactions.

Gift

A transfer of personal property by one individual to another without any consideration or payment.

Acceptor

In the context of banking and finance, an acceptor refers to the party who agrees to pay a bill of exchange or draft, typically a bank.