What Is the Marginal Rate of Substitution

question 73

Multiple Choice

What is the marginal rate of substitution?

• A)the price ratio
• B)the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market
• C)the rate at which the consumer is willing to trade one good for another so that she increases her utility
• D)the rate at which the consumer is willing to trade one good for another without any loss in utility

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Definitions:

Total Utility

This is the aggregate level of satisfaction or value that consumers derive from consuming a given amount of goods or services.

Marginal Utility

The additional satisfaction or utility received by consuming one more unit of a good or service.

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from purchasing one more unit of a good or service.

Marginal Utility

The additional satisfaction or utility received from consuming one more unit of a good or service.