The Marginal Rate of Substitution Is

question 52

Multiple Choice

The marginal rate of substitution is

• A) the change in the quantity of one good that just offsets a one unit change in the consumption of another such that the total satisfaction remains constant.
• B) the additional satisfaction from consuming an additional unit of a good or service.
• C) positively related to the level of income.
• D) the set of goods and services that are available to the consumer given his income.

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Definitions:

Manufacturing Sunk Cost

Costs that have already been incurred in the manufacturing process and cannot be recovered or altered by future decisions.

Capital Investment Analysis

The process of evaluating the potential returns and risks associated with investing in long-term assets to aid in decision making.

Manufacturing Productivity

A measure of the efficiency of a manufacturing process, typically calculated by dividing output by input.

Present Value

The immediate value of an upcoming lump sum or series of financial inflows, quantified by a specific rate of return.