carryon2869 carryon2869
  • 13-02-2020
  • Social Studies
contestada

) Can you explain why taking a monotonic transformation of a utility function doesn’t change the marginal rate of substitution?

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gerald4764
gerald4764 gerald4764
  • 14-02-2020

Answer: Applying a monotonic transformation to a utility function representing a preference relation simply creates another utility function representing the same preference utility of utility, basically what this means is that when monotonic transformation of utility is applied the marginal rate of substitution does not.

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