Read the two statements and choose the correct option.
I. The MRS is the slope of an indifference curve.
II. The MRS shows the rate at which the market exchanges the two goods.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true.
II is false: the MRS is the consumer's own willingness to exchange; the market rate is the price ratio, the slope of the budget line.

Ten questions from Budget Line & Optimal Choice, at your own pace.

Ten questions from Budget Line & Optimal Choice, at your own pace.

Read the two statements and choose the correct option.I. The MRS is the slope of an indifference curve.II. The MRS shows the rate at which the market exchanges the two goods.