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Define the marginal rate of substitution.

Define the marginal rate of substitution.

(सिमान्त प्रतिस्थापन दरलाई परिभाषित गर्नुहोस् ।)

Solution

The marginal rate of substitution (MRS) is the number of units of one commodity a consumer is willing to give up to gain one extra unit of another commodity, while keeping the same level of satisfaction. MRSxy is the amount of Y given up for one more unit of X, and it is the slope of the indifference curve.

  • Formula: MRSxy = ΔY / ΔX = MUx / MUy.
  • Diminishing MRS: as the consumer gets more X, each extra unit of X is worth fewer units of Y, so the MRS falls. For example, a person with a lot of rice and little meat gives up a lot of rice for one piece of meat, but less and less rice for each additional piece. This is why indifference curves are convex to the origin.

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    Price Market demand Market supply Shortage/ Surplus Pressure in price
    10
    20
    30
    40
    50

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    (एउटा चित्रमा बजार मागवक्र र बजार पूर्तिवक्र खिच्नुहोस् । सूची र चित्र दुवैमा सन्तुलन मूल्य र परिमाण देखाउनुहोस् ।)

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    (अ) जब मूल्य रु. १० बाट बढेर रु. २० हुन्छ र,

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