If an indifference curve is smooth and convex to the origin, then:
A)the two goods are said to be concave combinations of each other.
B)there is a diminishing marginal rate of substitution.
C)the two goods are said to be convex combinations of each other.
D)the indifference curve is said to be normal.

Question

Quizplus · Accepted Answer

A smooth and convex indifference curve indicates a diminishing marginal rate of substitution, meaning the consumer is willing to give up less and less of one good in exchange for more of the other. This is because the consumer values the two goods differently and the marginal utility received from each good decreases as more of it is consumed, leading to a convex shape.

If an Indifference Curve Is Smooth and Convex to the Origin