Understanding Michael's Marginal Rate of Substitution

What is Michael's Marginal Rate of Substitution between hamburgers and smores?

True / False.

Answer:

True

Michael's Marginal Rate of Substitution (MRS) of smores for hamburgers is not decreasing. This is evident from the scenario where Michael is willing to give up one hamburger more for eating his third smore while keeping his welfare constant.

The MRS refers to the rate at which an individual is willing to substitute one good for another while maintaining the same level of satisfaction. In Michael's case, he is inclined towards consuming more smores at the expense of hamburgers, thereby increasing his MRS of smores for hamburgers.

Michael's behavior of giving up more hamburgers to consume additional smores showcases an increasing trend in his MRS. This illustrates his preference for smores over hamburgers, leading to a higher rate of substitution in favor of smores.

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