Practicing Success
Which law indicates that there is a tendency for the MRS to fall with increase in quantity of another commodity? |
Law of diminishing marginal utility Law of diminishing marginal rate of substitution Law of variable proportion Law of supply |
Law of diminishing marginal rate of substitution |
Taking an example, Law of diminishing marginal rate of substitution states that as we increase the quantity of bananas, the quantity of mangoes sacrificed for each additional banana declines. In other words, MRS diminishes with increase in the number of bananas |