When indifference curves are bowed inward toward the origin:
A)people are less inclined to trade away goods that they have an abundance of
B)people can only increase satisfaction by consuming more of all commodities
C)it is unlikely that consumers will be willing to engage in trade
D)the marginal rate of substitution decreases as a consumer moves down an indifference curve

Question

Quizplus · Accepted Answer

When indifference curves are bowed inward toward the origin, it indicates that the marginal rate of substitution (MRS) decreases as a consumer moves down an indifference curve. This means that the consumer is willing to give up fewer units of one good to obtain an additional unit of the other good. Therefore, the opportunity cost of consuming one good in terms of the other good is higher at higher levels of consumption than at lower levels. This property of bowed indifference curves is consistent with the law of diminishing marginal utility.

When Indifference Curves Are Bowed Inward Toward the Origin