CUET Preparation Today
Chinto asked his teacher, "Why does the MRSXY diminishes". |
Because as consumption of X increases and Y decreases, utility of X decreases and that of Y increases. So consumer feels the inclination to sacrifice smaller and smaller amounts of Y in exchange for X. Because as consumption of Y increases and X decreases, utility of Y decreases and that of X increases. So consumer feels the inclination to sacrifice smaller and smaller amounts of Y in exchange for X. Because as consumption of X increases and Y decreases, utility of Y decreases and that of X increases. So consumer feels the inclination to sacrifice small and smaller amounts of Y in exchange for X. Because as consumption of Y increases and X decreases, utility of Y increases and that of X decreases. So consumer feels the inclination to sacrifice small and smaller amounts of X in exchange for Y. |
Because as consumption of X increases and Y decreases, utility of X decreases and that of Y increases. So consumer feels the inclination to sacrifice smaller and smaller amounts of Y in exchange for X. |
Please note that there is a difference between MRSXY and MRSYX. MRSXY means the quantity of Y one is wiling to give up to obtain one additional unit of X. and MRSYX means quantity of X one is willing to give up to obtain one additional unit of Y. Since the question is talking about MRSXY, we will increase X and decrease Y. This makes the option 2 and option 4 incorrect. In option 3, as X is increasing, it's utility should decline and not increase. so, option 3 is also incorrect. |
