As X increases (and Y decreases) as we move right along the indifference curve the MRS is diminishing. whether there is a diminishing MRSx, y). Also indicate on your graph whether the indifference curve will intersect either or both axes.

Well MRS decline continuously in IC curve because of law of diminishing marginal utility. Means when the consumer consumes more and more of good 1 then his marginal utility from another good keeps on declining and he is willing to give up less and less of good 2 for each good 1. Thats why MRS decline in IC curve.

MRS decline continuously in IC curve because of law of diminishing marginal utility. It means when the consumer consumes more and more of good 1 then his marginal utility from another good keeps on declining and he is willing to give up less and less of good 2 for each good 1.

Falling MRS implies that the consumer is willing to sacrifice lesser and lesser units of Good-Y to obtain additional units of Good-X, which is in accordance with the law of diminishing marginal utility. At the same time, units of Good-Y remaining with him become dearer to him.

When the budget lines is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and of the budget line are equal at that point i.e. Marginal rate of Substitution (MRS) is equal to the price ratio. At the optimum, the two rates should be the same.

The Difference Between the MRT and the Marginal Rate of Substitution (MRS) The marginal rate of substitution focuses on demand, while MRT focuses on supply. The marginal rate of substitution highlights how many units of Y would be considered by a given consumer group to be compensation for one less unit of X.

Another way to describe this assumption is to note that Alexei’s indifference curves are convex. In algebraic terms, if we rewrite the equation of an indifference curve U(t, y)=c in the form y=g(t, c), then g(t, c) is a decreasing and convex function of t for given c.