Which one of the following statements is true about the indifference curves for two goods that are close but not perfect substitutes?
A)The indifference curves are negatively-sloped straight lines.
B)The indifference curves are L-shaped.
C)The marginal rate of substitution is constant.
D)The marginal rate of substitution decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed.
E)The marginal rate of substitution is negative.

Question

Quizplus · Accepted Answer

Indifference curves for close but not perfect substitutes are bowed inward toward the origin and the marginal rate of substitution between the two goods decreases as more of the good measured on the x-axis and less of the good measured on the y-axis are consumed. Therefore, the correct statement is D.

Which One of the Following Statements Is True About the Indifference