Economics 2150A/B Lecture Notes - Indifference Curve, Utility, Monotonic Function
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ECON 2150A/B Full Course Notes
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It"s the rate at which a consumer is willing to give up one good to get another, while staying indifferent. How many units of y consumer is willing to give up (get) to get (give up) one unit of x, while staying indifferent. It"s the negative of the slope of the indifference curve. (tangent) Mrs may change as the bundle changes. This occurs as you increase x and decrease y willing to trade more and more for y for one unit of x. The slope of the indifference curve gets steeper. This occurs as you increase x and decrease y willing to trade less and less y for one more unit of x. As x goes up, |mrs| goes up. The slope of the indifference curve gets flatter. Always willing to trade the same amount of y for x, at any bundle. Satiation point: level of consumption where a good could change to a bad or neutral.