Assume that a consumer’s indifference curve is bowed outward but satisfies the other three properties of indifference curves. As the consumer moves from left to right along the horizontal axis, the consumer’s marginal rate of substitution
did you possibly find the answer to this? im stuck on it aswell :)
To determine how the consumer's marginal rate of substitution (MRS) changes as they move from left to right along the horizontal axis, we need to understand the properties of indifference curves.
Indifference curves represent combinations of two goods that provide the consumer with the same level of satisfaction or utility. Here are the three properties of indifference curves:
1. Downward Sloping: Indifference curves slope downwards from left to right, indicating that the consumer is willing to give up some quantity of one good to obtain more of the other while maintaining the same level of satisfaction.
2. Convexity (Bowed Outward): Most commonly, indifference curves are curved or bowed outward. This convex shape implies that the consumer experiences decreasing marginal rate of substitution (MRS) as they move along the curve. MRS measures the rate at which the consumer is willing to trade one good for another and is given by the absolute value of the slope of the indifference curve.
3. Non-intersecting: Indifference curves do not intersect, as they represent different levels of utility. Higher indifference curves indicate higher levels of utility or satisfaction.
Given that the consumer's indifference curve is bowed outward, it implies that the MRS (the slope of the indifference curve) is decreasing as the consumer moves along the curve from left to right along the horizontal axis. This means that the consumer is willing to give up less of one good to obtain more of the other good as they move to the right.
In other words, as the consumer's consumption of the good on the horizontal axis increases, the marginal utility derived from consuming more of that good decreases, causing the consumer to be less willing to give up other goods (represented by the vertical axis) to obtain more of it.
So, in summary, as the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution (MRS) decreases due to the bowed outward shape of the indifference curve.