Asked by Osvaldo Munoz on Jul 03, 2024
Verified
When indifference curves are downward sloping, the marginal rate of substitution is usually constant.
Indifference Curves
Visual charts utilized in microeconomics to depict various combinations of two products that offer the same level of satisfaction and utility to a buyer.
Marginal Rate
Usually referred to in the context of taxes or production, indicating the rate of increase in tax payment or output produced with the addition of one unit of input.
Constant
A fixed value in mathematics and science that does not change under specified conditions.
- Comprehend how the marginal rate of substitution connects to the gradient of indifference curves.
Verified Answer
ZK
Zybrea KnightJul 07, 2024
Final Answer :
False
Explanation :
Indifference curves are downward sloping due to the assumption of diminishing marginal rate of substitution, which means as one consumes more of one good, the amount of the other good that they are willing to give up to get an additional unit of the first good decreases.
Learning Objectives
- Comprehend how the marginal rate of substitution connects to the gradient of indifference curves.