Question

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 Upper P Subscript Upper X ​, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis.

Answer 1

1. True

Step-by-step explanation:

Marginal rate of substitution is quantity of good which a consumer will need to have in order to leave another good. The MRS equals to Px/Py. This will decrease when the demand curve decreases.