Question

Which of the following statements is correct?

I. Indifference curves can have a positive slope if both goods are desirable to the consumer.
II. The marginal rate of substitution represents the distance that separates two indifference curves

Answer 1

Indifference curves are always downward sloping and the marginal rate of substitution is the slope at a point on an indifference curve, not the distance between two curves.

Step-by-step explanation:

The student's question pertains to properties of indifference curves in microeconomic theory. To answer the question, the correct statement is that indifference curves cannot have a positive slope when both goods are desirable. Indifference curves are always downward sloping from left to right, meaning as you consume more of one good, you must consume less of another to maintain the same level of utility. This represents a trade-off between two desirable goods. Hence, statement I is incorrect. On the other hand, statement II is also incorrect because the marginal rate of substitution (MRS) does not represent the distance that separates two indifference curves; instead, the MRS reflects the slope at a given point on an indifference curve and signifies the rate at which a consumer is willing to substitute one good for another while keeping the same level of utility.