What are the differences between Marginal Opportunity Cost and Marginal Rate of Substitution ?
Marginal Opportunity Cost (or, simply opportunity cost) refers to the amount of production of one good that must be sacrificed to produce one additional unit of the other good. Opportunity cost is the slope of the Production Possibility Curve (PPC).
On the other hand, Marginal Rate of Substitution refers to the rate at which a consumer is willing to substitute one good for each additional unit of the other good. Marginal Rate of Substitution is the slope of the Indifference Curve.
Thus, the basic difference between the two concepts is that while, Marginal Opportunity Cost is associated with the concept of production, on the other hand, Marginal Rate of Substitution is associated with the concept of consumption.