A decreasing marginal rate of substitution indicates that an indifference curve is:
A) a straight line.
B) a vertical line.
C) a horizontal line.
D) bowed in toward the origin.

Question

Quizplus · Accepted Answer

A decreasing marginal rate of substitution implies that as a consumer substitutes one good for another, they are willing to give up less of one good to obtain an additional unit of the other. This results in an indifference curve that is bowed in toward the origin, reflecting diminishing marginal utility.

A Decreasing Marginal Rate of Substitution Indicates That an Indifference