Question

What is the absolute value of the slope of the indifference curve at any point called?

• A. substitution rate
• B. marginal rate of substitution
• C. marginal rate of indifference
• D. none of the above

Answer 1

The correct option is B marginal rate of substitution

Marginal rate of substitution is the rate at which consumer will give up a quantity of goods for the exchange of another good. The formula for calculating the marginal rate of substitution is change in product 'x' divided by change in product 'y'. Calculating the marginal rate of substitution will the give the slope of the indifference curve.