If an indifference curve is bowed in toward the origin, the marginal rate of substitution is:
A)different for each bundle along the indifference curve
B)likely to be constant for all bundles along the indifference curve
C)likely to be identical to the price ratio for each bundle along the indifference curve
D)not likely to reflect relative value of goods

Question

Quizplus · Accepted Answer

When an indifference curve is bowed in toward the origin, it indicates that the marginal rate of substitution (MRS) changes as one moves along the curve. This change in MRS reflects the consumer's varying willingness to trade one good for another as the quantities of the goods change, hence it is different for each bundle along the indifference curve.

If an Indifference Curve Is Bowed in Toward the Origin