marginal rate of substitution

Marginal Rate of Substitution (MRS) is defined as the maximum amount of another good that a person is willing to forgo for an extra unit of a good.

It is diminishing: the more of one good presently being consumed by a person, the less willing will the person be to give up another good to obtain an extra unit of the good.

Consider a case that you need to choose between 2 goods, X and Y.

Marginal rate of substitution means the additional amount of good X you possessed in order for you to give up one unit of good Y.

The marginal rate of substitution in general tends to increase as you possess more and more X, in order to compensate you to give up extra one unit of good Y.