Got Homework?

Connect with other students for help. It's a free community.

  • across
    MIT Grad Student
    Online now
  • laura*
    Helped 1,000 students
    Online now
  • Hero
    College Math Guru
    Online now

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

cpohagan Group Title

i have problem in calculating MRS (marginal rate of substitution) from MU(marginal utility). please explain with example ?

  • one year ago
  • one year ago

  • This Question is Open
  1. Sarki Group Title
    Best Response
    You've already chosen the best response.
    Medals 0

    Well, I hope this helps. MU of a good X1 measures the contribution of its one EXTRA unit to the Total Utility (U). MRS shows us HOW MUCH of the good X1 we have to gave up for the obtaining of the EXTRA unit of X2 good (SEE THE 2nd relation below). 1) MRS is equal to the (negative) relation of prices of two goods: \[MRS=-\frac{ p1 }{ p2 }\] 2) MRS is equal to the RELATIVE change in quantaty of good X1 and good X2: \[MRS= \frac{ DeltaX1 }{ DeltaX2 }\] 3) MRS is equal to the (negative) relation od MU of good X1 and MU of the X2 good: \[MRS= - \frac{ MU1 }{ MU2 }\] \[MU1=\frac{ deltaUtility }{ deltaX1 }\] - it is the same for MU2 and X2 When you sum this up. it is easy to understand and calculate MRS from MU. \[\frac{ DeltaX1 }{ DeltaX2 }= \frac{ p1 }{ p2 }=\frac{ MU1 }{ MU2}\]

    • 11 months ago
  2. Sarki Group Title
    Best Response
    You've already chosen the best response.
    Medals 0


    • 11 months ago
    • Attachments:

See more questions >>>

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...


  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.