A Diminishing Marginal Rate of Substitution Implies That Indifference Curves

question 28

Multiple Choice

A diminishing marginal rate of substitution implies that indifference curves are

• A)Convex
• B)Concave
• C)Straight lines
• D)Positively sloped

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Definitions:

Pareto Optimal

A circumstance in resource distribution where an improvement for one individual correlates with a setback for another.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning their consumption by one individual does not reduce availability to others.

Private Consumption

The total value of all goods and services consumed by individuals and households for personal use.

Pareto Efficient

A resource distribution condition where no reallocation can improve one person's situation without detrimentally affecting another person's situation.