Question

u ( x1,x2)= 8x1 +4x2

What is the value of MRS(18, 13)? (Don't forget to include a minus sign in your answer)

Answer 1

U( x1,x2)= 8x1 +4x2

MRS refres to the marginal ate of substitution, which means the rate in at which consumer is willing to sacrifice one good in order to gain additional unit of another good.

MRS = - (U(x1, x2)/ x1  U(x1, x2)/ x2)

U(x1, x2)/ x1 = 8

U(x1, x2)/ x2 = 4

MRS = - 8/4

MRS = - 2

So, MRS(18,13) is same as -2, since marginal rate of substiution here is just a constant number which is not affected by the values of x1 and x2. Thus, MRS (18,13) is constant -2.