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) states that as an individual substitutes one good for another, they are willing to give up less and less of the first good to obtain additional units of the second. If an individual's indifference curve map does not follow this assumption, it means the individual's preferences violate the law of diminishing marginal utility. In such a case, the tangencies of indifference curves to the budget constraint may not necessarily be points of utility maximization. Hence, the individual may not be able to maximize their utility given their budget constraint. However, it does not necessarily mean that the individual will not buy any 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