The number of units of X2 you are willing to give up to get one unit of X1. That depends on the location you are at on the indifference curve. Say, shrimps and steak- if you already have more Shrimps (20) and less Steak (1 oz), then you’re willing to give 5 shrimps to get one additional of ounce of steak. But if you have only 7 shrimps and 16 oz of steak, you’d give maybe just 1 shrimp in exchange of another ounce of steak.
a is between 0 and 1, so you have a nice feature of positive first derivative and negative second derivative- diminishing marginal utility for both goods. Good luck!
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The way my lecturer taught it was so difficult I couldn't keep up at all but you explained it so well and made it look so easy, thank you!
Glad it was helpful!
Thank you for taking the time to make these videos for those of us who need a little more detailed explanation!
Glad to help.
Thank you so much!!! You just save my grade!!! Have a wonderful day
Glad to help!
Brilliant explanation
Glad it was helpful!
What was the interpretation of the final form of the MRS in your example? Thanks a lot for the video!!
The number of units of X2 you are willing to give up to get one unit of X1. That depends on the location you are at on the indifference curve. Say, shrimps and steak- if you already have more Shrimps (20) and less Steak (1 oz), then you’re willing to give 5 shrimps to get one additional of ounce of steak. But if you have only 7 shrimps and 16 oz of steak, you’d give maybe just 1 shrimp in exchange of another ounce of steak.
@@IrisFranz Thank you sooooo much!
Np
Why the exponent of x2 is 1-a, shoudn t it be a different letter? Like b or whatever. I mean why 1-b
a is between 0 and 1, so you have a nice feature of positive first derivative and negative second derivative- diminishing marginal utility for both goods. Good luck!
@@IrisFranz thank you!!!