Asked by
Devyani Vaghela
on Oct 14, 2024
Verified
The marginal rate of substitution measures the distance between one indifference curve and the next one.
Marginal Rate
The rate at which one variable changes as another variable changes marginally or slightly.
Substitution
The economic principle of replacing one input or good for another due to changes in prices or preferences.
Indifference Curve
A graph representing different combinations of goods or services among which a consumer is indifferent, showing preference levels.
- Understand the calculation and relevance of marginal rates of substitution in the context of indifference curves.
Verified Answer
RL
Learning Objectives
- Understand the calculation and relevance of marginal rates of substitution in the context of indifference curves.