What Happens to the Absolute Value of the Marginal Rate

question 182

Multiple Choice

What happens to the absolute value of the marginal rate of substitution as you move down a convex (bowed toward the origin) indifference curve?

• A)It increases.
• B)It decreases.
• C)It remains constant.
• D)It could increase or decrease.

---

Definitions:

Business Management

The act of organizing, planning, leading, and controlling resources to achieve specific business objectives.

Venture Capitalism

The practice of investing in early-stage companies with strong growth potential in exchange for equity stakes.

Equity Stake

An ownership interest in a company through the holding of its stock, indicating a financial share in the entity's assets and profits.

Entrepreneurial Capitalism

An economic system where individuals are encouraged to start and grow their own businesses, often leading to innovation and economic growth.