Question

A consumer's willingness to trade one good for another can be expressed by the consumer's A) marginal rate of substitution. B) indifference curve. C) Both A and B above. D) None of the above

Answer 1

Answer:

Marginal rate of substitution

Indifference curve

Explanation:

Marginal rate of substitution is the act in which a customer substitutes some quantities of good for another and is still able to derive the same level of satisfaction . The substitution has to be marginal for the derived satisfaction to be maintained.

Indifference curve is a graphical representation of the combination of the quantities of goods that a customer perceives to be of the same value to him.

While the quantity of a good increases , the quantity of the other good decreases .

The two definitions above best describe the situation in the scenario.