What happens to the absolute value of marginal rate of substitution as you move down a convex (bowed toward the origin) indifference curve?
A) increases
B) decreases
C) remains constant
D) could increase or decrease

Question

Quizplus · Accepted Answer

As you move down a convex (bowed toward the origin) indifference curve, the absolute value of marginal rate of substitution (MRS) decreases. This is because the slope of the indifference curve becomes flatter, meaning that the consumer is willing to give up less of one good to obtain more of the other good. Therefore, the MRS decreases, indicating that the consumer's willingness to substitute one good for another decreases as they move down a convex indifference curve.

What Happens to the Absolute Value of Marginal Rate of Substitution