What do you mean by marginal rate of substitution? Why does marginal rate of substitution of X for Y fall when quantity of X is increased?
Introduction The Marginal Rate of Substitution (MRS) is an essential concept in consumer choice theory. It measures the rate at which a consumer is willing to give up one good (Y) to gain an additional unit of another good (X) while maintaining the same level of satisfaction. Definition of Marginal Rate of Substitution Formally, MRS […]