What happens to the absolute value of the marginal rate of substitution as you move down a convex (bowed toward the origin)indifference curve?
A)It increases.
B)It decreases.
C)It remains constant.
D)It could increase or decrease.

Question

Quizplus · Accepted Answer

The absolute value of the marginal rate of substitution (MRS) decreases as you move down a convex (bowed toward the origin) indifference curve. This is because the slope of the curve becomes flatter as you move down, meaning that a smaller change in one good can be compensated for by a larger change in the other good, resulting in a smaller absolute value of MRS.

What Happens to the Absolute Value of the Marginal Rate