Asked by Nicole Davis on Jun 22, 2024
Verified
Indifference curves are convex to the origin due to diminishing marginal rates of substitution.
Convex
A shape where a line drawn between any two points on the structure will lie outside it, often used in economics to describe preference curves.
Marginal Rates
Rates of tax or charges that apply to the next unit of income or consumption, often increasing with the amount subject to the rate.
- Determine and illustrate the significance of indifference curves along with consumer preferences.
- Apply the principles of marginal utility and the marginal rate of substitution in decision-making.
Verified Answer
TM
Tasheka MartinJun 24, 2024
Final Answer :
True
Explanation :
Indifference curves are convex to the origin because as a consumer substitutes one good for another, the amount of the good being given up that the consumer is willing to trade for an additional unit of the other good decreases, reflecting diminishing marginal rates of substitution.
Learning Objectives
- Determine and illustrate the significance of indifference curves along with consumer preferences.
- Apply the principles of marginal utility and the marginal rate of substitution in decision-making.
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