Explain whether each of the following statements is true or false. The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is O A. Px true because the MRS equals , which decreases as an individual moves upward along the demand curve. Py OB. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve. O C. false because the MRS is increasing as an individual moves downward along an indifference curve. OD. Px true because the MRS equals py, which decreases as an individual moves downward along the demand curve. O E. false because the MRS diminishes as an individual moves upward along the demand curve.
Explain whether each of the following statements is true or false. The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is O A. Px true because the MRS equals , which decreases as an individual moves upward along the demand curve. Py OB. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve. O C. false because the MRS is increasing as an individual moves downward along an indifference curve. OD. Px true because the MRS equals py, which decreases as an individual moves downward along the demand curve. O E. false because the MRS diminishes as an individual moves upward along the demand curve.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 3SQP
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Transcribed Image Text:Explain whether each of the following statements is true or false.
The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve.
Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is
O A.
Px
Py
, which decreases as an individual moves upward along the demand curve.
O B. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve.
true because the MRS equals
C. false because the MRS is increasing as an individual moves downward along an indifference curve.
O D.
Px
Py
true because the MRS equals which decreases as an individual moves downward along the demand curve.
O E. false because the MRS diminishes as an individual moves upward along the demand curve.
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