Consumer Theory

Question 1

Marginal Rate of Substitution (MRS):

Answer 1

The maximum amount of one good a consumer will sacrifice to obtain one more unit of another good and to maintain the same level of utility.
MRS = Δy / Δx

Question 2

Perfect Complements

Answer 2

Two goods are perfect complements if they are always consumed together in fixed proportions, e.g. left and right shoes
Indifference curve is 90 degrees