Diminishing Marginal Rates of Substitution and Quasi-concavity
No 15-6, UNCG Economics Working Papers from University of North Carolina at Greensboro, Department of Economics
Only in the 2-good case is a diminishing marginal rate of substitution equivalent to quasi-concavity of the utility function. When there are more than 2 goods, the conditions for quasi-concavity, expressed in terms of bordered hessians, are very unintuitive and tedious to implement. This paper demonstrates, however, that a constant or diminishing marginal rate of substitution between any good and a composite good, consisting of all other goods, is equivalent to quasi-concavity. A new method for checking quasi-concavity is demonstrated that is sometimes easier to use than the traditional method of checking the signs of the bordered hessians.
Keywords: Marginal Rates; Substitution; Quasi-concavity (search for similar items in EconPapers)
JEL-codes: D01 D11 (search for similar items in EconPapers)
Pages: 12 pages
New Economics Papers: this item is included in nep-upt
References: View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://bae.uncg.edu/econ/files/2015/07/Layson-working-paper-15-6.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://bae.uncg.edu/econ/files/2015/07/Layson-working-paper-15-6.pdf [301 Moved Permanently]--> https://bryan.uncg.edu/econ/files/2015/07/Layson-working-paper-15-6.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ris:uncgec:2015_006
Access Statistics for this paper
More papers in UNCG Economics Working Papers from University of North Carolina at Greensboro, Department of Economics UNC Greensboro, Department of Economics, PO Box 26170, Bryan Building 462, Greensboro, NC 27402. Contact information at EDIRC.
Bibliographic data for series maintained by Albert Link ().