Measuring "y" on the vertical axis and "x" on the horizontal axis,convexity of indifference curves imply that the magnitude of MRS of "y" for "x"
A)is decreasing as "x" increases.
B)is increasing as "x" increases.
C)is constant as "x" increases.
D)cannot be calculated for large levels of "x".

Question

Quizplus · Accepted Answer

Convexity of indifference curve implies diminishing marginal rate of substitution (MRS). As we move from left to right along the X-axis, the MRS of y for x becomes smaller, indicating that more and more units of x are required to compensate for the loss of one unit of y.

Measuring "Y" on the Vertical Axis and "X" on the Horizontal