Question

Assertion (A): MRS is defined as the amount of good Y given up in exchange for good X such that the total utility is constant.

Reason (R): Diminishing MRS means the consumer wants to give up lesser units of Y in exchange for good X.

पर्याय

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Explanation:

MRS is the rate at which a consumer is willing to trade one unit of commodity 'Y' for one more unit of commodity 'X.' According to the law of diminishing marginal rates of substitution, he attempts to maintain the same level of satisfaction as one proceeds down a standard convex-shaped curve, such as the indifference curve. Both statements are correct, but the reason is not the correct explanation.