What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitutes one product for another

What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitutes one product for another

What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitutes one product for another? Use examples to illustrate.

Guided Response:
In 300 words or more, please, provide your response to the above discussion question. Find two goods from your own consumption basket and explain how the MRS changes for the two products as you substitute one for the other. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.

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The marginal rate of substitution is a situation whereby a customer foregoes one product in order to prioritize another commodity which serves the same purpose (Gans, et al., 2011). It is applied in indifferent theory to conclude on the customer reaction toward the goods. The marginal rate of substitute is calculated among two commodities put in an indifference curve. This marginal rate of substitution always makes……

APA

337 words

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