Use the figure below to answer the following question.

Figure 9.2.4
-Refer to Figure 9.2.4. Rashid buys only books and albums. The figure shows his preferences. Rashid's indifference curves ________ display diminishing marginal rate of substitution because ________.
A)do; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books
B)do not; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books
C)do not; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books
D)do; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books
E)do; the price of an album decreases as Rashid increases the quantity he buys

Question

Use the figure below to answer the following question.
  
Figure 9.2.4
-Refer to Figure 9.2.4. Rashid buys only books and albums. The figure shows his preferences. Rashid's indifference curves ________ display diminishing marginal rate of substitution because ________.
A)do; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books 
B)do not; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books 
C)do not; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2 albums and 3 books 
D)do; the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books 
E)do; the price of an album decreases as Rashid increases the quantity he buys

Quizplus · Accepted Answer

Rashid's indifference curves do display diminishing marginal rate of substitution because the magnitude of the slope of both indifference curves decreases as Rashid consumes more albums and fewer books. This means that as Rashid consumes more albums and fewer books, he is willing to give up less and less books to obtain an additional album, indicating a decrease in the marginal utility of albums relative to books.

Use the Figure Below to Answer the Following Question