Diminishing MRS Clothing 16 (unIts per week) 14 MRSE 6 12-6 MRS=△C △F 10 B 8642 D MRS=2 G Food 2345 (units per week)
Diminishing MRS Food (units per week) Clothing (units per week) 1 2 3 4 5 2 4 6 8 10 12 14 16 A B D E G -6 1 1 1 1 -4 -2 -1 MRS = 6 MRS = 2 F MRS C = −
Perfect substitutes and Perfect Complements ATwo goods are perfect substitutes when he marginal rate of substitution of one good for the other is constant Two goods are perfect complements when the indifference curves for the goods are shaped as right angles
Perfect Substitutes and Perfect Complements Two goods are perfect substitutes when the marginal rate of substitution of one good for the other is constant. Two goods are perfect complements when the indifference curves for the goods are shaped as right angles
Perfect substitutes Apple Juice (glasses)4 Orange Juice 2 3 glasses)
Perfect Substitutes Orange Juice (glasses) Apple Juice (glasses) 1 2 3 4 1 2 3 4 0
Perfect Complements Left Shoes 2 3 4 Right shoes
Perfect Complements Right Shoes Left Shoes 1 2 3 4 1 2 3 4 0
Application of Consumer Preferences O Automobile executives must regularly decide when to introduce new models and how much money to invest in restyling. O An analysis of consumer preferences would help to determine when and if car companies should change the styling of their cars
Application of Consumer Preferences Automobile executives must regularly decide when to introduce new models and how much money to invest in restyling. An analysis of consumer preferences would help to determine when and if car companies should change the styling of their cars