Question 1 (a) What is the marginal rate of substitution and what is its importance in consumer theory? (b) Compare and contrast the marginal rate of substitution of perfect substitutes and perfect complements. Use diagrams and algebra to aid your exposition. (c) Briefly discuss the following: i. Lexicographic preferencesii. Homothetic preferences

Question 1 (a) What is the marginal rate of substitution and what is its importance in consumer theory? (b) Compare and contrast the marginal rate of substitution of perfect substitutes and perfect complements. Use diagrams and algebra to aid your exposition. (c) Briefly discuss the following: i. Lexicographic preferencesii. Homothetic preferences

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 11PA

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