Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
The set of consumption bundles (X,Y) such that Bob is indifferent between (X,Y) and (5,10) is the set of all bundles such that Y = 50/X. The set of bundles (X,Y) such that Bob is indifferent between (X,Y) and (50,4) is the set of all bundles such that Y = 200/X.
a. Graph the indifference curve passing through point (5,10)
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