Micro-economics , Indifference Curve, Marginal rate of substitutio

Marginal rate of substitution: The rate at which one commodity can be substituted for another commodity without any loss of satisfaction.

Suppose there are two goods, mangoes and apples. The marginal rate of substitution may be:

1: Marginal rate of substitution of mangoes for apples.
2: Marginal rate of substitution of apples for mangoes.

Marginal rate of substitution of mangoes for apples. MRS/MA

The amount of apples that a consumer is willing to give up for obtaining some amount of mangoes.

MRs of M for A = ∆A/∆M

From A to B ∆A/∆M = 4/1 = 4:1
From B to C ∆A/∆M = 3/1 = 3:1
From C to D ∆A/∆M = 2/1 = 2:1
From D to E ∆A/∆M = 1/1 = 1:1


Marginal rate of substitution of Apples for Mangoes:
MRS of A for M:

The amount of Mangoes that a consumer is willing to give up for obtaining some units of apples.

MRs of A for M = ∆M/∆A

From B to A ∆M/∆A = 1/4 = 1:4
From C to B ∆M/∆A = 1/3 = 1:3
From D to C ∆M/∆A = 1/2 = 1:2
From E to D ∆M/∆A = 1/1 = 1:1
Reasons for diminishing Marginal Rate of substitution: