If an indifference curve is bowed in toward the origin, the marginal rate of substitution is
A)not likely to reflect the relative value of goods.
B)likely to be constant for all bundles along the indifference curve.
C)likely to be identical to the price ratio for each bundle along the indifference curve.
D)different for each bundle along the indifference curve.

Question

Quizplus · Accepted Answer

When an indifference curve is bowed in toward the origin, it indicates that the marginal rate of substitution is decreasing as one moves down along the curve. This implies that the consumer is willing to give up less and less of one good in exchange for getting an additional unit of the other good. Therefore, the marginal rate of substitution is different for each bundle along the indifference curve.

If an Indifference Curve Is Bowed in Toward the Origin