The figure above shows one of a consumer\'s indifference curves. The marginal ra

Question

The figure above shows one of a consumer's indifference curves. The marginal rate of substitution (MRS) at point C equals 2. 4. 1/2. 8. More information is needed to calculate the MRS. Along an indifference curve, if the marginal rate of substitution is 3, then the consumer is willing to give up 3 units of the good measured along the y -axis for 1 unit of the good measured along the x -axis. pay $3 for one unit of the good measured along the y -axis. pay $3 for one unit of the good measured along the y -axis. give up 3 units of the good measured along the y -axis for 1 unit of income, that is, $1 of income. give up 1 unit of the good measured along the y- axis for 3 units of the good measured along the .r -axis.

Explanation / Answer

18. Option A is correct.

The MRS = change in y intercept/change in x intercept.

At C, MRS = (4-0)/(2-0) = 4/2 = 2.

19. Option A is correct.

MRS shows the amount of good on y axis that the consumer is willing to give up in order to gain additional unit of good on x axis.

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