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marginal rate of substitution

  • 05-03-2011 07:48PM
    #1
    freeze4real
    Registered Users, Registered Users 2 Posts: 2,540 ✭✭✭


    hello guys,
    i have been trying to find the marginal rate of substitution of a good without the price given.i only have two points that's the consumption bundles pf good of GOOD A and GOOD B .

    thanks


Comments

  • #2
    Anonymous1987
    Closed Accounts Posts: 784 ✭✭✭Anonymous1987


    Could you state the actual question? Another way of calculating the MRS is by computing the marginal utilities by differentiation and dividing the marginal utility of Good A by the marginal utility of Good B.


  • #3
    freeze4real
    Registered Users, Registered Users 2 Posts: 2,540 ✭✭✭freeze4real



    here it's.


    daniel initially consumes 12 miilk's and 4 coffees. Her consumption of milk's reduced to 2 units, but he is given enough coffee so that he is just as better off as before. How much coffee does he now consume?

    what is daniel's marginal rate of substitution

    (i) when she is consuming bundle (12,6)?
    (ii) when she is consuming bundle (12,18)?


  • #4
    Anonymous1987
    Closed Accounts Posts: 784 ✭✭✭Anonymous1987


    Given the information above you can calculate the MRS by simply dividing the quantity of Good A by the quantity of Good B to get the slope of the indifference curve which is the MRS. Hence for part (i) you will get a MRS of 2 meaning a consumer will give up 2 units of Good A for 1 unit of Good B.


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