Question

If a person is willing to give up two burgers for one pizza; then the marginal rate of substitution equals ...

Answer 1

As we know,

Marginal rate of substitution is the rate at which the Consumer gives away one good in exchange for the other good such that he remains at the same utility level.

Formula of MRS,

$MRS_{X,Y}= -\frac{\Delta Y}{\Delta X}$

As, Here Pizza is good Y and Burgers is good X.

As, Change in good Y (Pizza) = 1

Change in good X (Burger) = 2

So,

$MRS_{X,Y}= -\frac{1}{2}$

• So, Marginal rate of substitution equals -1/2