Practice question · True or false
The marginal rate of substitution typically diminishes as you move along an indifference curve to the right.
Hints
- As one good accumulates, its relative value falls.
- That is what makes the curve bow rather than stay straight.
Show the answer
True
Why
As you accumulate more (and less ), each additional unit of becomes less valuable relative to , you demand less compensation. This gives indifference curves their convex shape.
Practise Consumer Preferences
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