Answer to Question #310678 in Microeconomics for vy tran

Question

1. What is the marginal rate of substitution, MRS? State the definition and explain, in words, what it means

2.MRS will have an influence on the shape of an indifference curve. What influence?

Answer 1

1) Marginal rate of substitution is the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility. It is the amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying.

2) The slope of indifference curve is the marginal rate of substitution (MRS). The shape of difference curve depends on the type of goods a consumer is consuming.