As we move down and to the right along an indifference curve,the marginal rate of substitution
A) Increases
B) Decreases
C) Remains constant
D) Increases, then decreases

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to trade off one good for another while still maintaining the same level of utility. As we move down and to the right along an indifference curve, the consumer is consuming more of the good on the horizontal axis and less of the good on the vertical axis, so the marginal utility of the horizontal good is decreasing while the marginal utility of the vertical good is increasing. Therefore, the consumer requires a greater quantity of the vertical good to be willing to give up one unit of the horizontal good. This results in a decrease in the MRS as we move down and to the right along the indifference curve.

As We Move Down and to the Right Along an Indifference