The assumption that the magnitude of the slope of an indifference curve decreases moving to the right along the indifference curve is known as the assumption of
A) the price effect.
B) a diminishing marginal rate of substitution.
C) an increasing marginal rate of substitution.
D) an indifference curve effect.

Question

Quizplus · Accepted Answer

The assumption that the magnitude of the slope of an indifference curve decreases moving to the right along the indifference curve is known as the assumption of diminishing marginal rate of substitution. It means that as the consumer moves down the indifference curve, he or she is willing to trade off less and less of one good for the other good.

The Assumption That the Magnitude of the Slope of an Indifference