When Two Goods Are Perfect Substitutes, the Marginal Rate of Substitution

question 24

Multiple Choice

When two goods are perfect substitutes, the marginal rate of substitution:

• A)increases as the abundance of one good increases
• B)increases as the scarcity of one good increases
• C)decreases as the scarcity of one good increases
• D)is constant

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Definitions:

Populations

The entire group of individuals or items of interest in a statistical study.

Critical Value

A point on the scale of a statistical distribution that corresponds to a specified level of significance for hypothesis testing.

Null Hypothesis

A hypothesis in statistical analysis that suggests no significant difference or effect; it's the default position that there is no association between two measured phenomena.

Mean Square

A statistical measure used particularly in ANOVA, calculated by dividing the sum of squares by its degrees of freedom.