marginal rate of substitution
Themarginalrateofsubstitutionisthemaximumamountofacertaingoodanindividualiswillingtoexchangeforreceivinganadditionalunitofanothergood.,Themarginalrateofsubstitution(MRS)isthequantityofonegoodthataconsumercanforegoforadditionalunitsofanothergoodat...
Indifference curves and the marginal rate of substitution
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Theindifferencecurvesaredownwardslopingin(t,y)space,soaswemovetotherightalonganindifferencecurve,trisesandyfalls,andthusy/tfalls.
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