**Question**: An indifference curve diagram has movies on the vertical axis and sodas on the horizontal. As the consumption of sodas increases and movies decreases (moving down and to the right along an indifference curve), the marginal rate of substitution of sodas for movies:- A. rises.- B. falls.- C. does not change.- D. probably changes, but more information is needed to determine if it rises or falls.**Explanation**: An indifference curve represents various combinations of two goods (in this case, movies and sodas) between which a consumer is indifferent. The marginal rate of substitution (MRS) reflects how much of one good (movies) a consumer is willing to give up in exchange for an additional unit of another good (sodas), while maintaining the same level of utility. As you move along the curve, the slope of the curve can indicate changes in this rate.

Marginal rate of substitution is defined as the number of units of commodity 'x' a consumer is…

An indifference curve diagram has movies on the vertical axis and sodas on the horizontal. As the consumption of sodas increases and movies decreases (moving down and to the right along an indifference curve) the marginal rate of substitution of sodas for movies

An indifference curve diagram has movies on the vertical axis and sodas on the horizontal. As the consumption of sodas increases and movies decreases (moving down and to the right along an indifference curve) the marginal rate of substitution of sodas for movies

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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