Diminishing marginal rate of substitution implies that the marginal rate of substitution
A)falls as one travels down (eastward) on an indifference curve.
B)rises as one travels down (eastward) on an indifference curve.
C)stays the same as one travels down (eastward) on a typical indifference curve.
D)falls as one move to higher (northeast) in the indifference curve map.

Question

Quizplus · Accepted Answer

The diminishing marginal rate of substitution implies that as one moves down (eastward) on an indifference curve, the marginal rate of substitution (the amount of one good an individual is willing to give up for an additional unit of another good) decreases. This is because as an individual obtains more of one good, the marginal utility (satisfaction) of each additional unit of that good decreases relative to the marginal utility of the other good. Therefore, the individual is willing to give up less of the first good for each additional unit of the other good.

Diminishing Marginal Rate of Substitution Implies That the Marginal Rate