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Marginal Rate of Substitution: Definition, Formula & Examples

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

How is the marginal rate of substitution best defined?

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1. The following items are always present in Julie's handbag: Prescription medicine, toilet paper, chewing gum, reading glasses, and a pen. Which item would you expect to have the highest marginal rate of substitution?

2. The following items are always present in Margaret's handbag: Prescription medicine, toothpicks, chewing gum, and a pen. Which item would you expect to have the lowest marginal rate of substitution?

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About This Quiz & Worksheet

This quiz will allow you to review what you know about how the marginal rate of substitution is used. It will also assess your understanding of the effects of this rate on businesses.

Quiz & Worksheet Goals

You are expected to identify the following:

  • What the marginal rate of substitution is
  • The marginal rate of substitution for various items
  • What happens when producers pay attention to the marginal rate of substitution

Skills Practiced

The questions on this quiz were written to help you improve your ability to use these skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on the marginal rate of substitution
  • Distinguishing differences - compare and contrast topics from the lesson, such as highest and lowest rate of substitution
  • Interpreting information - verify that you can read information regarding producers caring about their own marginal rate of substitution and interpret it correctly

Additional Learning

Further information about this topic is provided in the lesson that accompanies this quiz, entitled Marginal Rate of Substitution: Definition, Formula & Examples. Study this lesson and you'll learn about:

  • Examples of the marginal rate of substitution in the real world
  • Effects of misjudging the marginal rate of substitution
  • Utility of goods
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