Diminishing marginal rate of substitution implies that indifference curves are:
A) convex from the origin.
B) concave from the origin.
C) either convex or concave from the origin.
D) straight line.

Question

Quizplus · Accepted Answer

The diminishing marginal rate of substitution implies that as a consumer substitutes one good for another, the amount of the second good needed to compensate for one less unit of the first decreases. This results in indifference curves that are convex from the origin, reflecting a decreasing slope as one moves along the curve.

Diminishing Marginal Rate of Substitution Implies That Indifference Curves Are