Question

Distinguish the marginal rate of substitution from the marginal utilities of x and y

Answer 1

Marginal rate of substitution is the amount of of a good that a consumer is willing to consume in relation to another goods as long as the new good is equally satisfying .

It is used to analyze consumer behavior.this is calculated between two goods placed on an indifference curve displaying frontier of utility for combination of goods x and y.

This involves a sloping curve where each point along it represents quantities of goods x and goods y that would be substituting for one another.

MRSxy = dy / dx = MUx / MUy