The equation for the marginal rate of substitution of good X for good Y (that is, MRS_XY) is given by: A) $\Delta$U(X,Y)/$\Delta$X. B) -$\Delta$Y/$\Delta$X. C) $\Delta$Y × $\Delta$X. D) -X/Y.

Question

Quizplus · Accepted Answer

The equation for the marginal rate of substitution of good X for good Y is given by -ΔY/ΔX, which represents the amount of good Y that must be given up to obtain one more unit of good X while keeping utility constant. Therefore, option B (-F1F1F1S1ΔF1F1F10Y/F1F1F1S1ΔF1F1F10X) correctly represents the marginal rate of substitution of good X for good Y. Option A is incorrect because it includes U(X,Y) in the denominator, which is unnecessary for the calculation of marginal rate of substitution. Option C is incorrect because it multiplies the changes in X and Y rather than dividing them. Option D is incorrect because it represents the slope of the budget constraint, not the marginal rate of substitution.

The Equation for the Marginal Rate of Substitution of Good Δ\DeltaΔ

The Equation for the Marginal Rate of Substitution of Good $\Delta$