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Unformatted text preview: Marginal rate of substitution (MRS) Diminishing MRS Important families of utility functions Perfect substitutes Perfect complements Cobb-Douglas Quasilinear Notes: • The text book introduces the MRS already in chapter 3, you can skip this part and come back to it when we learn utility. • The text book definition of the MRS has the opposite sign to the redefinition we gave in class. You may use the alternative definition as long as you understand the difference and apply it correctly when needed. Readings are from Varian, Intermediate Microeconomics , 6 th Edition. Chapter numbers may vary in the different editions....
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This note was uploaded on 02/23/2008 for the course ECON 3130 taught by Professor Masson during the Spring '06 term at Cornell.
- Spring '06
- Opportunity Cost