A.3 Marginal rate of substitution | Consumption - Microeconomics

[@Policonomics]

This video explains how to calculate and use the marginal rate of substitution (MRS). We start by learning how to calculate it, then move on to use it in order to properly draw indifference curves and, finally, we analyse the MRS for different kinds of indifference curves. A.3 Marginal rate of substitution | Consumption - Microeconomics Learn, and enjoy!

[@greensimon8625]

This video is awesome but at the beginning explanation, MRS(x,y)=(MU_x)/(MU_y) should be how many unit of good "y" is the agent willing to give up for an extra unit of good "x" instead.

[@glenipolus9731]

omg in 5 minutes you explained something my teacher couldn't explain in 3 hours

[@94tompa]

Dear Policonomics, why is the formula for the MRS = 2x/2y (or x/y in the second example)? shouldn't it be the other way around? 2y/2x =(u'(y)/u'(x))?

[@wrjazziel]

I'm alswo waiting for an answer on that :)

[@gphilipsen95]

Because in order to get the MRS you need to calculate the marginal utility (MU), the partial derivative, for x and y. In the first example the utility function is given by y^2+x^2. This results in the following partial derivatives: dU/dy (or y')= 2y^2-1=2y and dU/dx (or x')=2x^2-1 = 2x. In the second example the utility function is given by y * x, resulting in a different differentiation due to the multiplication. The dU/dy (or y')= x * y^1-1 = x and dU/dx ( or x') = x^1-1 * y = y . The difference in the first and second example is mainly caused by the nature of the utility functions. Example one uses y + x and example two uses y*x, this makes a big difference when calculating the partial derivatives.

[@48_subhambanerjee22]

Much love from India.. understood

[@justchannel2135]

Superfine and clean presentation. I totally Loved it.

[@serinacat4781]

thank you. the video has everything I need to know

[@tylercompton9761]

This video was great! Thank you so much that makes so much sense now!

[@felony077]

AMAZING !! THANK YOU SO MUCH !!!!!!!

[@parvathicheboyina9282]

Hi

[@wrjazziel]

Good video... 2nd problem: can anyone explain to me why she flipped x and y on the MRS formula, after derivation she got Ux=Y and Uy=x but in the formula she flipped it MRS= Y/X .... please anyone! thanks in advance

[@osamahbooshi1600]

Its important for you to explain why math is not math in economics. What i mean is when you take the derivative of X and Y they dont just end up As X and Y as the derivative should be 1 and 1. If iam not mistaken.

[@DavidRotin]

They are doing partial derivative. So when deriving the utility function you make one of the variable a constant.

[@YOSRfakhfakh]

I love how precise the interpretation was

[@musaa.olarray6456]

Wow , I most admit that you clear some challenges for me here but how can I go about solving problems like this U=√XY to find the marginal rate of substitution

[@anthonysp7223]

why in example 1 it's x/y but in example 2 its y/x??

[@Nic5t4r]

In case you are still interested: f(x)=y¹ * x¹ -> f'(x)= 1 * y¹ * x^(1-1) -> y¹ -> y You differentiate only partially.

[@dibissaejeta4447]

Given utility function u(x1,x2)=max(@x1,Bx2), find mariginal rate of substitution

[@christinemambo1319]

Thanks so much

[@mogesk.m5445]

Thanks amillion.

[@Colonelboereieney]

Great vid ba

[@chintubagarty2236]

Your language is very hard ma'am