A consumer's total utility level being the same, the amount of good 'X' that the consumer has to forego, in order to get an additional unit of good 'Y' is termed as :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Marginal Rate of substitution
Along an indifference curve, the consumer stays at the same level of satisfaction. To get one more unit of Y, she must give up some X. The amount of X she gives up, with her total utility unchanged, is the marginal rate of substitution (MRS).
Option (1) Monotonic preference — Incorrect. Preferences are monotonic when a consumer prefers a bundle that has more of at least one good and no less of the other. It is an assumption about how bundles are ranked. It does not measure what is given up.
Option (2) Marginal Rate of substitution — Correct. It is the rate at which the consumer substitutes one good for the other so that her total utility remains the same.
Option (3) Marginal Rate of transformation — Incorrect. This term belongs to production. It is the amount of one good an economy must give up to produce one more unit of another good. It is read along the production possibility frontier. It says nothing about a consumer’s utility.
Option (4) Diminishing Marginal Utility — Incorrect. This law says that as a consumer takes more units of one good, the extra utility from each further unit falls. It deals with one good alone, with nothing of a second good given up.
NCERT (2026-27): “…It is clear that when a consumer gets one more banana, he has to forego some mangoes, so that her total utility level remains the same and she remains on the same indifference curve. Therefore, indifference curve slopes downward. The amount of mangoes that the consumer has to forego, in order to get an additional banana, her total utility level being the same, is called marginal rate of substitution (MRS). In other words, MRS is simply the rate at which the consumer will substitute bananas for mangoes, so that her total utility remains constant.…” |