Question

difference between slope and mrs of budget line?

Answer 1

The budget line is a set of combinations of two goods that can be purchased if whole of the given income is spent on them and its slope is negative of the price ratio. Because the price of the commodity can't be negative and the slope of the budget line is negative, thus budget line is downward sloping. The marginal rate of substitution (MRS) is the rate at which a buyer can give up certain amount of one commodity in exchange for another commodity while maintaining the same level of utility. The MRS is always changing for a specific point on the curve, and mathematically indicates the slope of the curve at that point