Question

The table shows bundles along with an indifference curve for two goods X and Y:
x:0 1 2 3 4 5 6 7 8 9 10
Y:30 23 17 12 8 5 3 1.2 0.5 0
Calculate the MRS at each point

Answer 1

Answer on the Question #78924, Economics / Microeconomics

The table shows bundles along with an indifference curve for two goods X and Y:

x:0 1 2 3 4 5 6 7 8 9 10

Y:30 23 17 12 8 5 3 1.2 0.5 0

Calculate the MRS at each point

When quantity of X increases, quantity of Y must decrease. The MRSxy = ΔY/ΔX. So as X increase, the denominator gets bigger and MRS decreases. As X increase, Y decreases and the numerator gets smaller so MRS decreases. Both these effects work so that as X increase MRS decreasing.

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