Picture a graph with pork on the vertical axis and chicken on the horizontal axis. Larryís indifference curves are horizontal. This implies he (a) receives no satisfaction from pork. (b) receives no satisfaction from chicken. (c) prefers to consume chicken and pork together. (d) is willing to trade one pound of chicken for one pound of pork.
Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
Picture a graph with pork on the vertical axis and chicken on the horizontal axis. Larryís indifference
(a) receives no satisfaction from pork. (b) receives no satisfaction from chicken. (c) prefers to consume chicken and pork together. (d) is willing to trade one pound of chicken for one pound of pork.
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