What does the marginal rate of substitution measure?
A) It measures the rate at which a consumer is willing to trade off one product for another while keeping utility constant.
B) It measures the rate at which a consumer will substitute one good for another when the price of one good changes.
C) It measures the rate at which a consumer must give up one good to purchase another good.
D) It measures the change in utility from consuming one additional unit of a good.
A
You might also like to view...
Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 3 workers, the wage rate is
A) $25 per day. B) $30 per day. C) $70 per day. D) $50 per day.
You have 40,000 frequent flier miles. You could exchange your miles for a round trip ticket to Bermuda over spring break. Does that mean your flight to Bermuda would be free? Explain your reasoning
What will be an ideal response?