Assume that a consumer's indifference curve is bowed inward and satisfies the other three properties of indifference curves. As the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution
A)increases.
B)decreases.
C)remains constant.
D)increases, then decreases.

Question

Quizplus · Accepted Answer

Since the indifference curve is bowed inward, it implies that the consumer experiences diminishing marginal rate of substitution. As the consumer moves from left to right along the horizontal axis, he/she gets relatively more of one good and less of the other. Given that the consumer is giving up more and more of one good to get less and less of another, the marginal rate of substitution will decrease. Hence, the correct answer is (B) decreases.

Assume That a Consumer's Indifference Curve Is Bowed Inward and Satisfies