Re: Microeconomics

Posted by duck on
URL: http://discussion-forum.276.s1.nabble.com/Microeconomics-tp7147902p7167905.html

Hi Ritu.. :)

A good is a neutral good  if the consumer does not care about its consumption at all. That is, the consumption of that good will not increase the consumer's utility.

Now, it is given that good 1 is neutral,this implies that additional consumption of good 1 has no impact on total utility Or MU(x) = 0.
So, MRS=0 in this case.

Hint: Just plot horizontal IC and try it out.. :)