Question

Indifference curves cannot be a straight line as it would implies _______.

• A. constant marginal rate of substitution
• B. increasing marginal rate of substitution
• C. increasing return to scale
• D. none of the above

Answer 1

Answer: (A)

constant marginal rate of substitution

A constant marginal rate of substitution would mean that the consumer will only be able to choose a equal number of both goods. This would mean the satisfaction of the consumer cannot be analysed anymore as he is indifferent between products as the opportunity cost for choosing the other product is the same.