6. Marginal Rate of Substitution and Marginal Utility 

This is so good explained. I didn't find an explanation with graphs anywhere. After 13 years you helped a german economics student. Crazy

I took a class on intro economics which was very confusing. I started to hate economics, but gave it a second go. Now I love every minute of it. I can't get enough of it. I have to say you explain these concepts very clearly. Every time I watch any of your videos, I'm reminded why I want to study economics. I just purchased the book and look forward to receiving it so I can increase my intake of microeconomics.

you are so much better then my turkish econ instructor...seriously i can't understand a word he says and when dealing with complex subjects like this it is a must

That depends on how you define MRS. Some people (as you point out) define MRS as - MUx/MUy (a negative number). In that formulation, MRS is the slope of the indifference curve. I find that approach confusing because the optimality condition is MRS = -Px/Py. Therefore, I define MRS as MRS = MUx/MUy (a positive number). This is what I do in my book (Intromediate Microeconomics). It is also what Landsburg does in his Price Theory book.

@RockaRolla74 U=10 and U=12 are arbitrary (and their precise number doesn't matter for the conclusions we draw, or for how MUx and MUy are related to MRS). For the economic theory of demand, all that matters for what is that 12 is bigger than 10 and that the indifference curves are shaped the way they are.

Why is it so much fun to explain stuff on a whiteboard? Makes me want to go draw on mine.

I like your presentation and approach to teaching. I am enjoying every video you've posted so far.

I have learned more watching 3 of your videos than I have the entire semester of lectures with my professor. I think I might actually pass my final exam now.

your videos are excellent in terms of explanation, but i will say this. Consider getting a simple cheap clip on mic, for absolute clarity. I also find the constant movement with the camera a bit annoying - consider using 2 cheap camcorders mounted on tripods, 1 zoomed in on the board, 1 zoomed out to see you, and in post production you can easily edit between the 2...

@fathumptydumpty MRS is the steepness of the indifference curve. Px/Py is the steepness of the budget constraint. If MRS < Px/Py, that means the indifference curve is flatter than the budget constraint at that point. In other words, the two are not tangent (and the tangency would take place at a higher utility, but up and to the left)

@maezingwon1986 Mathematically, yes. Economically, we call it MRTS to describe the tradeoff between factor inputs (and their relative marginal productivity in producing output), whereas MRS is used to describe the tradeoff between consumption goods (and their relative marginal contribution to the individual's utility). That said, the two problems are mathematically identical. It is just the context and labels that change. See my video 17 for how the two problems relate.

@ekr091 Thanks for the compliment and the feedback on the choice of example.

Imagine drawing a line segment that connects points A and D.... In the video, I find an equation for the slope of that line segment (which approximates the slope of the indifference curve). The slope of a straight line is rise/run. In this case, the movement from A to B is "run" (and is equal to 1). The "rise" is the movement from B to D (which equals -2). Hence, the slope is -2, and the MRS is 2.

excellent for building up the intuition.

hi your videos are great! I was a little confused at how you got the slope for the equation 0=MUtaste+slope*MUhealth.

Your DDDD MAN!!!!! Lol thanks bro... You've done a great service and helped 70,000 future economist.... My prof tried to explain this and you explained it smh... Thanks again

@fathumptydumpty That's what we typically assume about consumers to solve for their demand curves, but if MRS< Px/Py, the consumer is NOT maximizing satisfaction. As a practical matter, if you computer MRS and Px/Py, and they are not equal, you know that the consumer is not maximizing utility at that bundle.

I LOVE YOU!!! Thank you so much for letting your awesome explanations benefit anyone who needs it (that is ME ^^) u_u you saved my semester!! Honestly I have two great books with me (Principles of Economics/ Mankiw and Microeconomics/ Pindyck-Rubinfeld) but I'm currently an exchange student in South Korea and our professor lacks pedagogy I guess or I'm just more comfortable with your way of explaining notions. Anyway : big virtual hug thank you :D

Thanks a lot for the video! I was just not able to understand why is it MRS= MUx/MUy since it has the positive value of the slope and the slope was y/x, as rise/run. Sorry for the confusion, I never understood this.

thank you alot, this video really facilitated to understand this stuff

Utility analysis is an ordinal analysis. You can't say that MU(taste) is 12-10. Because 10 and 12 are just ranks which says that the consumer derives higher satisfaction from the higher IC which has an ordinal value of 12 but it cannot say by how much. I think you got that part wrong there.

got an exam tomorrow and your videos really helped me understand MRS, Im just a little unsure cause i have a preparation question asking why must the MRS between 2 goods equal the ratio of the prices to achieve maximum satisfaction what can I search up for information on this.

Really great info but please get a tripod! It makes me dizzy to watch

Can you please help me with this problem which ask me to find the utility function of x1+2x2. It asks me to find MP1(x1,x2), MP2(x1,x2) and MRTS. Do I differentiate with respect to x1 to find MP1(x1,x2) and do the same thing for MP2(x1,x2) and then find the MRTS or do I differentiate with respect to x1x2 to find MP1(x1,x2) and MP2(x1,x2).

Thanks! I appreciate the referrals.

@maitaiaddict225 to be more specific, how did u get the slope from going to point B to C to D

Why answer is 0 along the indifference curve?

Thank you so much for this video! It really helped me understand :)

how does mrs relate to marginal utility though?

how did you get the utility value of each indifference curev (10 and 12)?

thanks it solves my problem!

You are great!

@ekr091 let me guess.. microeconomics with calculus- Perloff

Great content, but the shaky cam style of filming is terrible, makes me feel sick. can't you keep it panned out? But anyway thanks.

Excellent explanation but not complete

get a tripod please

hey you sound like chris klein from american pie. lol

now I kinda learn these stuffs in german, the lectures in the uni are sucks. plus i hate the language.

My nigga!