If an individual's indifference curve map does not obey the assumption of a diminishing MRS,then:
A)the individual will not maximize utility.
B)the individual will buy none of good x.
C)tangencies of indifference curves to the budget constraint may not be points of utility maximization.
D)the budget constraint cannot be tangent to an appropriate indifference curve.

Question

Quizplus · Accepted Answer

The assumption of a diminishing marginal rate of substitution (MRS) is a necessary condition for utility maximization. If an individual's indifference curve map does not follow this assumption, then the tangencies of the indifference curves to the budget constraint may not be points of utility maximization. Therefore, the individual may not be able to fully maximize their utility. However, this does not mean the individual will buy none of good x or that the budget constraint cannot be tangent to an appropriate indifference curve.

If an Individual's Indifference Curve Map Does Not Obey the Assumption