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Marginal Rate of Substitution Calculator

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The Marginal Rate of Substitution Calculator helps in understanding the trade-offs between two goods, indicating how much of one good a consumer is willing to give up for an additional unit of another good, keeping utility constant.

It offers both a Basic Calculator for direct MRS calculations and an Advanced Calculator for average MRS between two goods pairs.

Marginal Rate of Substitution Calculator

Basic Calculator Usage

  1. Marginal Utility of Good X: Enter the marginal utility of the first good.
  2. Marginal Utility of Good Y: Enter the marginal utility of the second good.
  3. Marginal Rate of Substitution (MRS): Calculate or input MRS, which is the rate at which the goods are substituted.

How To Calculate

Example 1:

Step Value
Marginal Utility of X 12
Marginal Utility of Y 4
Calculation 12/412 / 4
MRS Result 3

In this case, the MRS is 3, meaning for every unit of Good Y, the consumer is willing to give up 3 units of Good X.

Example 2:

Step Value
Marginal Utility of X 15
Marginal Utility of Y 5
Calculation 15/515 / 5
MRS Result 3

Here, the MRS is also 3, reflecting similar trade-off preferences

Advanced Calculator Usage

  1. Marginal Utility of Good X1 and Y1: Enter the marginal utilities for the first pair of goods.
  2. Marginal Utility of Good X2 and Y2: Enter the marginal utilities for the second pair.
  3. Average MRS: The calculator provides the average MRS between these two pairs.

Example Calculations

Example 1:

Step Value
Marginal Utility of X1 10
Marginal Utility of Y1 2
Marginal Utility of X2 12
Marginal Utility of Y2 4
MRS Calculation (10/2+12/4)/2(10 / 2 + 12 / 4) / 2
Average MRS 3

In this case, the average MRS between both pairs is calculated to be 3.

Example 2:

Step Value
Marginal Utility of X1 16
Marginal Utility of Y1 4
Marginal Utility of X2 20
Marginal Utility of Y2 5
MRS Calculation (16/4+20/5)/2(16 / 4 + 20 / 5) / 2
Average MRS 4

With these values, the average MRS between both pairs results in 4, showing a balanced trade-off across different utility levels.

 

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