The MRSBW is the rate at which the consumer is willing to give up wine to obtain a small increment of bread while holding [...]
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holding utility constant (i.e., movement along an indifference curve).
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Open it The MRS BW is the rate at which the consumer is willing to give up wine to obtain a small increment of bread, holding utility constant (i.e., movement along an indifference curve).
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES in Exhibit 2 is characteristically drawn to be convex when viewed from the origin. This indicates that the willingness to give up wine to obtain a little more bread diminishes the more bread and the less wine the bundle contains.
<span>We capture this willingness to give up one good to obtain a little more of the other in the phrase marginal rate of substitution of bread for wine, MRS BW . The MRS BW is the rate at which the consumer is willing to give up wine to obtain a small increment of bread, holding utility constant (i.e., movement along an indifference curve). Notice that the convexity implies that at a bundle like a′′, which contains rather a lot of wine and not much bread, the consumer would be willing to give up a considerable amount of wi
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