A Diminishing Marginal Rate of Substitution Implies That Indifference Curves

question 42

Multiple Choice

A diminishing marginal rate of substitution implies that indifference curves are

• A)convex.
• B)concave.
• C)straight lines.
• D)positively sloped.

---

Definitions:

Utility Function

A mathematical representation that assigns a numerical value to different bundles of goods, indicating the level of satisfaction or happiness the consumer derives from their consumption.

Pareto Efficient

An economic state where it is impossible to make any one individual better off without making at least one individual worse off.

Initial Endowment

The set of resources or assets that agents possess at the start of an economic analysis or experiment.

Pareto Optimal

A scenario in resource distribution where enhancing the welfare of a single person would lead to a detriment to another person.