CA Foundation P4 · Chapter 2 · Question 12 of 15
An indifference curve is normally convex to the origin because of:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Diminishing marginal rate of substitution
Explanation
As a consumer substitutes X for Y along an indifference curve, she is willing to give up fewer and fewer units of Y for each additional unit of X; i.e., MRSxy diminishes. This makes the curve convex. A constant MRS would produce a straight-line indifference curve (perfect substitutes).
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