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Questions
Why does MRS fall?
Why does marginal rate of substitution fall?
Short Answer
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Solution
The marginal rate of substitution is the rate at which a specific quantity of one good is given out for another. A person is willing to exchange fewer and fewer units of X for each additional unit of a commodity, let's call it Y, as he collects more and more units of Y. It indicates that X's MRS for Y is decreasing.
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