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Marginal Rate of Substitution

Marginal Rate...

Question

Marginal Rate of substitution is the ______________________.

A

Willingness of consumer to pay for one good in terms of another.

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B

Willingness of consumer to pay for one good in monetary terms.

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C

Willingness of consumer to pay for one good in terms of gold.

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D

None of the above

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Solution

The correct option is B Willingness of consumer to pay for one good in terms of another.
The marginal rate of substitution is the rate at which the consumer can give up one good for another.

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