The marginal rate of substitution
A)may increase or decrease on a given indifference curve, depending on whether the substitution or the income effect is dominant.
B)increases as one moves southeast along an indifference curve.
C)is constant at all points on the budget line.
D)declines as one moves southeast along an indifference curve.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) declines as one moves southeast along an indifference curve because the consumer is willing to give up less of one good to get more of another, reflecting diminishing marginal utility.

The Marginal Rate of Substitution