Question : Marginal rate of exchange also denotes:
Option 1: Slope of Demand Curve
Option 2: Slope of budget line
Option 3: Slope of IC Curve
Option 4: None of the above
Answer (1)
25th Jan, 2024
Correct Answer: Slope of budget line
Solution :
The slope of the budget line, which is the ratio of the price of good X to the price of good Y, is the marginal rate of exchange. The marginal rate of substitution, on the other hand, is the slope of the indifference curve that measures the units of good y sacrificed to gain one additional unit of good x.
Hence correct will be option B.
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