Why Do Indifference Curves Have a Negative Slope

question 188

Multiple Choice

Why do indifference curves have a negative slope?

• A)because consumers take market prices as given
• B)because consumers face a budget constraint
• C)because to keep utility constant, a consumer must get more of one good if she is to give up some of the other
• D)because scarcity implies that it is not possible to consume more of one good without giving up some of the other

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Definitions:

Total Product

The total quantity of output produced by a firm over a given period of time.

Marginal Product

The extra production generated when one more unit of a particular input is added, with all other inputs remaining unchanged.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.