Question

When two goods are perfect substitutes the marginal rate of substitution?

Answer 1

Hence, marginal rate of substitution (MRS) between red and blue pencil comes out to be a fixed number, 1. Indifference curves describing the trade off between consumption of such goods (perfect substitutes) are therefore straight lines as MRS would be constant along the curve

Answer 2

Explanation:

When two goods are perfect substitutes, the marginal rate of substitution : - is constant along the indifference curve. - increases as the scarcity of one good increases.