marginal rate of substitution

Definitions

Economics

  • noun the extra amount of one product needed to compensate a consumer for a decrease in the amount of another product.
  • acronymMPS
  • acronymMRS

Health Economics

  • (written as Marginal Rate of Substitution)

    The marginal rate of substitution in consumption is the (negative) slope of an indifference curve. It is the ratio of the marginal utilities of two goods as one is substituted for the other such as to leave the individual in question indifferent (ceteris paribus).

    The marginal rate of substitution in production is the (negative) slope of an isoquant. It is the ratio of the marginal products of two inputs as one is substituted for the other such as to leave the output rate constant (ceteris paribus).

  • synonymmarginal rate of technical substitution
    (written as Marginal Rate of Substitution)

General English

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