The property of diminishing marginal rate of substitution implies that
A) the more current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
B) the less current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
C) the more current consumption the consumer has, the more future consumption she is willing to give up for one more unit of current consumption.
D) the indifference curves are bowed away from the origin.
E) the indifference curves have a constant slope.

Question

Quizplus · Accepted Answer

The diminishing marginal rate of substitution property implies that as a consumer obtains more of one good, she is willing to give up less of the other good to obtain an additional unit of the first good. Thus, the more current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption. Therefore, choice A is the best answer.

The Property of Diminishing Marginal Rate of Substitution Implies That