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

Question

Quizplus · Accepted Answer

The property of diminishing marginal rate of substitution means that as a consumer increases their consumption of one good while holding the consumption of the other good constant, the marginal rate of substitution between the two goods will decrease. In other words, the consumer becomes less willing to give up future consumption of the other good in order to consume more of the first good as they already have a higher level of consumption of the first good. Therefore, the correct choice is B.

The Property of Diminishing Marginal Rate of Substitution Implies That