True or false 7. The marginal rate of substitution is always the same constant number when...
True or false
7. The marginal rate of substitution is always the same constant number when the goods are imperfect substitutes and no matter how many of each good is being consumed.
Homework Answers
False.
Marginal rate of substitution (MRS) is not constant across the indifference curve. It is measured at a particular point, where MRS is the number of units of one good given up in order to consume one additional unit of the other good. So at every point, the quantity of two goods are different, which makes MRS different. Only when the goods are perfect substitutes, MRS is constant because indifference curve is a straight line with constant slope.
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