Question

consider the indifference curve illustrated in the figure on the right. the curve is convex to the origin because
a. the marginal rate of substitution falls as a consumer buys more movie tickets.
b. the consumer must abide by a budget constraint.
c. more is preferred to less.
d. the law of diminishing marginal utility always holds.

Explanation:

To determine why the indifference curve is convex to the origin, we analyze each option:

• Option A: The marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one good for another. For a convex indifference curve, the MRS falls as the consumer consumes more of one good (here, movie tickets). This is the key reason for convexity to the origin.
• Option B: A budget constraint relates to the feasible combinations of goods a consumer can afford, not the shape of the indifference curve.
• Option C: "More is preferred to less" (non - satiation) explains why indifference curves are downward - sloping and further from the origin are preferred, not convexity.
• Option D: The law of diminishing marginal utility is related to the slope of the total utility curve. While it is related to MRS, the direct reason for convexity is the falling MRS, not just the existence of diminishing marginal utility.

Answer:

A. the marginal rate of substitution falls as a consumer buys more movie tickets.