If an indifference curve is bowed inward toward the origin,what do we know about the marginal rate of substitution
A)It is not likely to reflect the relative value of goods.
B)It is likely to be constant for all bundles along the indifference curve.
C)It is likely to be identical to the price ratio for each bundle along the indifference curve.
D)It is different for each bundle along the indifference curve.

Question

Quizplus · Accepted Answer

An indifference curve that is bowed inward toward the origin implies that the marginal rate of substitution (MRS) is diminishing, meaning that as we consume more of one good, we need to give up increasing amounts of the other good to maintain the same level of utility. This indicates that the MRS is different for each bundle along the indifference curve, as we are willing to trade off less of a good for a larger quantity of the other good at higher levels of consumption.

If an Indifference Curve Is Bowed Inward Toward the Origin,what