Introduction to Economics 1 Deneme Sınavı Sorusu #725157
Which of the following happens when Marginal Rate of Substitution (MRS) happens?
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Consumer starts investigating alternative products due to his or her limited budget. |
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Consumer shifts from one product to another without questionning. |
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Consumer's brand loyalty towards some brands increase consciously. |
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When a consumer’s consumption increases, his or her openness to other products will increase as well. |
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When a consumer’s consumption of good X increases, his or her valuation of good X relative to good Y will decline. |
Consumers differ in the importance that they attach to an extra unit of a particular good. This is useful in getting a measure of the relative importance attached by the consumer to the acquisition of another unit of a particular good. This means that whereas a consumer’s consumption of good X increases (and his or her consumption of good Y declines), his or her valuation of good X relative to good Y will decline. Besides, MRS is defined as the number of units of good Y that must be given up if the consumer, after receiving an extra unit of good X, is to maintain a constant level of satisfaction or utility.
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