Marginal Rate of Substitution: It is defined as the quantity of goods sacrificed for an additional unit of another good. The formula for it is: Here, is the marginal rate of substitution of and is the marginal utility of is the marginal utility of Optimality Rule: According to the indifference curve approach, the consumer achieves its optimum bundle at a appoint where Here, is the quantity of good X. is the quantity of good Y. is the total income. is the price of good X. is the price of good Y.

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Chapter 10.A, Problem 7P

To determine

Concept Introduction:

Marginal Rate of Substitution: It is defined as the quantity of goods sacrificed for an additional unit of another good. The formula for it is:

Here,

is the marginal rate of substitution of and

is the marginal utility of

is the marginal utility of

Optimality Rule: According to the indifference curve approach, the consumer achieves its optimum bundle at a appoint where

Here,

is the quantity of good X.

is the quantity of good Y.

is the total income.

is the price of good X.

is the price of good Y.

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