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MRS
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
The value being placed on bread, in terms of the amount of wine the consumer is willing to give up for bread, diminishes the more bread and less wine he has.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
ence curve is quite steep at that point.) However, at a point like a′, which contains considerably more bread but less wine than a′′, the consumer is not ready to sacrifice nearly as much wine to obtain a little more bread. This suggests that <span>the value being placed on bread, in terms of the amount of wine the consumer is willing to give up for bread, diminishes the more bread and less wine he has. It follows that the MRS BW is the negative of the slope of the tangent to the indifference curve at any given bundle. If, at some point, the slope of the indifference curve had value –


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