economics medium True/False

An Indifference Curve is convex to the origin because of the assumption of the 'Diminishing Marginal Rate of Substitution', meaning consumers are willing to give up less and less of Good Y to acquire one more unit of Good X as they accumulate more of Good X.

  1. True
  2. False

Answer: True

As a consumer moves down an indifference curve, they possess an abundance of Good X and very little of Good Y. Consequently, Good Y becomes relatively more valuable to them, and they are less willing to sacrifice it for yet another unit of Good X. This diminishing willingness to trade (MRS) mathematically forces the curve to bow inward (convex) toward the origin.

Topic Microeconomics - Consumer Behavior
Exam Relevance UPSC Prelims, SSC CGL
More economics Questions Back to all questions