An indifference curve diagram has movies on the vertical axis and sodas on the horizontal. As the consumption of sodas increases and movies decreases (moving southeast along an indifference curve) the marginal rate of substitution of sodas for movies
A) rises.
B) falls.
C) does not change.
D) probably changes, but more information is needed to determine if it rises or falls.

Question

Quizplus · Accepted Answer

Moving southeast along an indifference curve means giving up some movies to get more sodas, indicating a decreasing marginal rate of substitution (MRS). Therefore, as consumption of sodas increases and movies decrease, the MRS of sodas for movies falls.

An Indifference Curve Diagram Has Movies on the Vertical Axis