Suppose the quantity of burgers is on the horizontal axis and the quantity of bags of French fries is measured on the vertical axis and Carol's indifference curves are drawn in the graph.As Carol consumes more
A) burgers, moving along an indifference curve her marginal rate of substitution for burgers decreases.
B) bags of fries, moving along an indifference curve her marginal rate of substitution for burgers decreases.
C) burgers and bags of fries moving along an indifference curve, Carol reaches her best affordable point.
D) of either good, moving along an indifference curve her marginal rate of substitution for burgers increases.
E) of both goods, moving from one indifference curve to a higher indifference curve, her marginal rate of substitution definitely does not change.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal rate of substitution, as Carol consumes more of one good (burgers), she will require increasingly larger amounts of the other good (fries) to compensate for the decrease in satisfaction from consuming more of the first good. This means that her marginal rate of substitution for burgers decreases as she consumes more of them along an indifference curve.

Suppose the Quantity of Burgers Is on the Horizontal Axis