GENERAL KNOWLEDGE

Detailed explanation-1: -Law of Diminishing Marginal Utility and Law of Diminishing Marginal Rate of Substitution: According to Prof. Hicks, the law of diminishing marginal rate of substitution explains this tendency of consumer behaviour with far fewer assumptions than the law of diminishing marginal utility.

Detailed explanation-2: -The marginal rate of substitution (MRS) is the quantity of one good that a consumer can forego for additional units of another good at the same utility level. MRS is one of the central tenets in the modern theory of consumer behavior as it measures the relative marginal utility.

Detailed explanation-3: -As we move along the indifference curve, marginal rate of substitution (MRS) tends to diminish. Because when we have less of a commodity, intensity of its desire increases. Accordingly, less and less of it is sacrificed for every additional unit of the other commodity.