Question

With X on the horizontal axis and Y on the vertical axis, what does diminishing marginal rate of substitution imply about the slope of an indifference curve, and how does it change as we move along the curve?

Answer 1

Diminishing marginal rate of substitution implies that the slope of an indifference curve decreases as we move along the curve.

Step-by-step explanation:

An indifference curve represents the different combinations of two goods that yield the same level of utility to an individual. The slope of the indifference curve is given by the marginal rate of substitution (MRS), which measures the amount of one good a person is willing to give up in order to obtain one more unit of the other good, while keeping utility constant. Diminishing marginal rate of substitution implies that as we move along the indifference curve, the slope of the curve decreases.