Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves implies that the MRS of "y" for "x"
A) is decreasing as "x" increases.
B) is increasing as "x" increases.
C) is constant as "x" increases.
D) cannot be calculated for large levels of "x".

Question

Quizplus · Accepted Answer

The convexity of indifference curves means that the absolute slope, or MRS, of "y" for "x" is diminishing as "x" increases. This is because the curve is getting flatter as we move to the right, meaning that a smaller amount of "y" needs to be given up to receive an additional unit of "x." Therefore, the MRS of "y" for "x" is decreasing as "x" increases.

Measuring "Y" on the Vertical Axis and "X" on the Horizontal