ECON 103 Lecture Notes - Lecture 8: Relative Price, Liquid Oxygen, Demand Curve
24 May 2017
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Indifferences cures i, 2 and 0 are all different curves with 2 being the highest, 1 being in middle and 0 being the lowest. Curve 2"s points are preferred over curve 1s points, and prefers any point on curve 1, to curve 0. Marginal rate of substitution: marginal rate of substitution. Is the rate at which a person will give up good y( the good measured on y axis) to get an additional unit of good x(good measured on the x axis) While remaining indifferent (remaining on the same indifference curve key point. If the indifference curve is steep, the mrs is high: meaning the person is willing to give up a large quantity of good y to get an additional unit of good x. Her mrs at that point is the magnitude of the slope of the indifference curve at point c. Place a straight line, against or tangent to indifference curve at point c.
