CBSE BOARD XII, asked by AjayPrabhu5192, 1 year ago

Why marginal rate of substitution diminish for a stable ce

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Answered by Anonymous
2
for equilibrium to be stable at any point on an indifference curve, the marginal rate of substitution between any two goods must be diminishing and be equal to their price ratio i.e. MRS' = Px/Py Therefore, the indifference curve must be convex to the origin at the point of tangency with the budget line.

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