Indifference curves are generally convex to the origin because of:
A)the law of diminishing marginal utility.
B)substitution and income effects.
C)limitations of the economy in producing an ever-increasing amount of the commodities in question.
D)the instability of individual human wants.
E)none of the above.

Question

Quizplus · Accepted Answer

The convex shape of indifference curves is due to the law of diminishing marginal utility, which states that as a person consumes more of a good, the additional utility or satisfaction derived from each additional unit of the good decreases. This leads to a diminishing rate of substitution between the two goods and hence the convex shape of the indifference curves. The other options are either not relevant or do not explain the convex shape of indifference curves.

Indifference Curves Are Generally Convex to the Origin Because Of