Which one of the following statements is false?
A)If the indifference curve is steep, the marginal rate of substitution is high.
B)A low marginal rate of substitution implies a flat indifference curve.
C)A flat indifference curve implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
D)A high marginal rate of substitution implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y.
E)A high marginal rate of substitution implies a consumer must receive a small amount of good X to compensate for a large decrease in good Y.

Question

Quizplus · Accepted Answer

This statement is false because a high marginal rate of substitution implies that the consumer is willing to give up a large amount of good Y to receive a small increase in good X, therefore, they do not need to receive a large amount of X to compensate for a small decrease in Y.

Which One of the Following Statements Is False