I am a graduate student surviving on a limited income and my money income is $300 per month, the price of good X is $4, and the price of good Y is also $4. Given these prices and income, I buy 50 units of X and 25 units of Y. The combination of X and Y bundle J. At bundle J my marginal rate of substitution (MRS) is 2. At bundle J, if I increase consumption of Y by 1 unit, how many units of X can I give up and still reach the same level of utility?© BrainMass Inc. brainmass.com October 9, 2019, 5:23 pm ad1c9bdddf
The marginal rate of substitution (MRS for short) is the rate at which consumers are willing to give up units of one good in exchange ...
The expert examines the marginal rates of substitution.