Answer:
Marginal Rate of Substitution (MRS) refers to the rate at which a consumer is willing to substitute one good for each additional unit of other good. Algebraically, \[MRS=\frac{\Delta Y}{\Delta X}\] It shows how many units of good Y the consumer is willing to sacrifice to gain one additional unit of good X. The following schedule explains the concept of MRS Consumption Combinations Units of good X Units of good Y \[MR{{S}_{xy}}\] P 2 10 - Q 3 5 5 R 4 2 3 S 5 1 1 As the consumer moves from consumption combination P to consumption combination Q, consumption of good X increases from 2 units to 3 units while, the consumption of good Y falls from 10 units to 5 units. That is to gain one additional unit of good X, the consumer sacrifices 5 units of good Y. thus, the MRS is 5.
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