Question

The term convex means that the slope of the indifference curve along the curve.}

• A. decreases, up
• B. increases, down
• C. increases, increases
• D. decreases, decreases

Hint:

Convex indifference curve means diminishing MRS. As the consumer moves downward along the curve, the slope decreases.

Answer 1

The Correct Option is D

Concept: An indifference curve is convex to the origin because of diminishing marginal rate of substitution. This means that as the consumer moves down along the curve, the slope becomes flatter.

Step 1: Understanding slope of indifference curve.
The slope of an indifference curve is known as the Marginal Rate of Substitution. \[ MRS = \frac{\Delta Y}{\Delta X} \] It shows how much of good \(Y\) the consumer is willing to give up for one more unit of good \(X\).

Step 2: Understanding movement along the curve.
As the consumer moves downward along the indifference curve, the consumer gets more of good \(X\) and less of good \(Y\). \[ X \uparrow,\quad Y \downarrow \]

Step 3: Understanding diminishing MRS.
Because the consumer has more of \(X\), the willingness to sacrifice \(Y\) for additional \(X\) decreases. Hence, the slope of the indifference curve decreases. \[ MRS \downarrow \] Therefore, convexity means the slope of the indifference curve decreases as the consumer moves downward along the curve.