Q359
When two goods are perfect substitutes of each other, then
A.
MRS is falling
B.
MRS is rising
C.
MRS is constant
AnswerD.
None of the above
Answer: Option C
Solution
Answer: Option C
Solution:
When two goods are perfect substitutes of each other, then MRS is constant. Two commodities are perfect substitutes for each other – In this case, the indifference curve is a straight line, where MRS is constant.