Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?
A)The indifference curves are negatively-sloped straight lines.
B)The indifference curves are L-shaped.
C)The marginal rate of substitution is constant.
D)The marginal rate of substitution decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed.
E)both A and C

Question

Quizplus · Accepted Answer

In the case of two goods that are close but not perfect substitutes, the indifference curves are bowed inward and the marginal rate of substitution (MRS) decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed. This means that consumers are willing to give up fewer units of the good on the y-axis for each additional unit of the good on the x-axis as they consume more of the x-axis good. Therefore, the correct answer is D.

Which One of the Following Statements Is True About the Indifference