# The law of Diminishing Marginal Rate of substitution with the help of a diagram

Marginal Rate of Substitution

A consumer remains indifferent between different combinations of goods on an indifference curve. Therefore, to remain on the same indifference curve the consumer has to substitute one commodity for another by just that much amount which keeps him at the same level of satisfaction. There rate at which the consumer is willing to substitute one commodity for another in order to maintain his level of satisfaction is known as the marginal rate of substitution.

In the above figure at point P on IC the consumer gets ON of good Y of OM of good X and point Q he gets ON1  (Y) and OM1 (X) since both points P and Q are on the same IC, therefore he is indifferent between them. This means the consumer sacrifice NN1 (Y) to get MM1 (X) in order to move from P to Q. The rate, which he is willing to substitute X for Y, is therefore.

DY/DX =NN1/MM1

This is Marginal rate of substitution of x for y. In short form it can be

Written as MRSxy = dY/dX

## 3 thoughts on “The law of Diminishing Marginal Rate of substitution with the help of a diagram”

1. I needed to write you a bit of observation to help thank you very much the moment again regarding the striking opinions you’ve discussed here. It was simply particularly open-handed of people like you to convey openly all numerous people could have offered for an electronic book to earn some profit on their own, notably now that you might well have tried it in the event you wanted. These solutions as well served as the great way to know that most people have the same zeal just like my very own to know more and more in terms of this matter. I’m certain there are a lot more enjoyable situations up front for those who look into your website.

2. I must express my thanks to the writer just for rescuing me from this condition. Just after checking through the online world and seeing techniques that were not pleasant, I thought my life was over. Existing without the presence of approaches to the difficulties you’ve resolved by way of the short article is a crucial case, and the ones that could have in a negative way affected my career if I hadn’t discovered your blog post. Your actual training and kindness in maneuvering every item was very helpful. I am not sure what I would have done if I had not come across such a subject like this. I can at this point relish my future. Thank you very much for this reliable and sensible guide. I will not think twice to refer your site to any individual who needs and wants guidelines on this situation.

3. I have to express my appreciation to the writer just for rescuing me from such a condition. As a result of looking through the internet and seeing ways that were not beneficial, I assumed my entire life was done. Living without the solutions to the difficulties you’ve resolved through your entire guideline is a critical case, as well as ones that could have in a negative way damaged my career if I had not encountered your blog. Your good ability and kindness in handling all things was important. I am not sure what I would’ve done if I hadn’t come across such a stuff like this. I can now look ahead to my future. Thanks very much for this impressive and effective help. I won’t think twice to propose your web blog to any individual who desires care about this matter.