Moving down along an indifference curve,
A) the price of the good measured on the vertical axis decreases.
B) total utility decreases.
C) the marginal rate of substitution for the good on the horizontal axis decreases.
D) the slope of the budget line decreases.
E) the consumer increasingly prefers the new consumption points to the old consumption points.

Question

Quizplus · Accepted Answer

Moving down along an indifference curve means that the consumer is giving up some units of the good measured on the vertical axis in order to consume more units of the good measured on the horizontal axis. This implies that the marginal rate of substitution (MRS) for the good on the horizontal axis is decreasing because the consumer is willing to give up fewer units of the other good to consume an additional unit of the horizontal good. Therefore, choice C is the correct answer. Choices A and D are incorrect because the price of the goods and the slope of the budget line remain constant. Choice B is incorrect because total utility may not necessarily decrease as the consumer moves down along an indifference curve. Choice E is partially correct, but it does not explain the reason why the consumer prefers the new consumption points to the old ones.

Moving Down Along an Indifference Curve