Marginal rate of substitution, topics

Summary

• \(MRS\) for perfect substitutes is constant, independent of \(x_1\) and \(x_2\)
• \(MRS\) for perfect complements is either \(0\) or \(∞\) or undefined
• With (strictly) convex preferences:
• \(MRS\) (strictly) increas ing in \(x_1\)
• \(\left| MRS \right|\) (strictly) decreas ing in \(x_1\)
• We have (strictly) d iminishing marginal rate of substitution (ignoring sign)