Bobby moves along an indifference curve for shirts and pants by increasing consumption of shirts and decreasing consumption of pants. As Bobby has more and more pants, the number of shirts he is willing to trade for yet another pair of pants
A) decreases.
B) increases.
C) does not change.
D) initially decreases and then increases.

Question

Quizplus · Accepted Answer

This scenario describes the law of diminishing marginal rate of substitution (MRS), which states that as a consumer increases the quantity consumed of one good, they must decrease the quantity consumed of the other good in order to remain on the same indifference curve. Therefore, as Bobby has more and more pants, he will trade fewer and fewer shirts for yet another pair of pants, since he is already consuming a relatively large quantity of pants and values each additional pant less and less. This means that the MRS of pants for shirts decreases, leading to a decrease in the number of shirts Bobby is willing to trade for yet another pair of pants.

Bobby Moves Along an Indifference Curve for Shirts and Pants