The property of diminishing marginal rate of substitution implies that
A) the more current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
B) the less current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
C) the more current consumption the consumer has, the more future consumption she is willing to give up for one more unit of current consumption.
D) the indifference curves are bowed away from the origin.
E) the indifference curves have a constant slope.

Question

Quizplus · Accepted Answer

Diminishing marginal rate of substitution means that as we move along an indifference curve, the consumer is willing to give up less and less of one good in order to obtain an additional unit of the other good. Therefore, the more current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption. This is why option A is the correct answer.

The Property of Diminishing Marginal Rate of Substitution Implies That