Moving down the indifference curve, the marginal rate of substitution
A) is constant.
B) is rising.
C) diminishes.
D) is highly volatile.
E) depends on household income.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal utility, as a consumer consumes more of a good, the additional satisfaction received from each additional unit decreases. This means that as the consumer moves down the indifference curve, they are willing to give up fewer and fewer units of the other good in exchange for one additional unit of the first good. Therefore, the marginal rate of substitution diminishes.

Moving Down the Indifference Curve, the Marginal Rate of Substitution