When a consumer increases units of X - commodity by giving up some units of Y- commodity and even to attain the same level of satisfaction, the marginal rate of substitution, will be calculated by :
Change in Y - Commodity divided by change in X - Commodity
The marginal rate of substitution of X for Y is the amount of Y the consumer is willing to give up for one more unit of X while staying on the same indifference curve.
It is therefore measured as \(MRS_{XY} = -\frac{\Delta Y}{\Delta X}\), the slope of the indifference curve (taken in absolute terms), which also equals \(\frac{MU_X}{MU_Y}\).
Dividing the change in X by the change in Y gives the reverse rate (MRS of Y for X), and dividing a change in quantity by a marginal utility mixes quantities with utility, which is not the MRS.
Hence, the answer is Change in Y - Commodity divided by change in X - Commodity.
Similar Questions
Match the items of the List - I with those of the List - II and indicate the correct code :
List - I List - II (a) Convexity of the indifferences curve to origin (i) Indifference curve analysis (b) Quantity of certain goods sacrificed for a large quantity of other goods (ii) Consumer’s equilibrium (c) Equality of the ratio of the marginal utilities with that of the prices of the two goods (iii) Substitutability/complementarity of the two goods (d) Separation of substitution and income effects from the total price effect (iv) Marginal rate substitution Codes :
(a) (b) (c) (d)
Important Questions from Indifference curve analysis
In the case of two production-inputs. which one of the following is not a property of Isoquants (the production indifference curves)?
Indifference curve theory states that:
What is constant along an indifference curve?
(1) Level of Utility
(2) Level of Output
(3) Level of Price- Which one of the following is not the basic property of indifference curves ?
- An indifference curve measures ____________ level of satisfaction derived from different combinations of commodity X and Y.
