Question

The basic concept of indifference curve analysis is _______.

• A. marginal Rate of substitution
• B. marginal Rate of technical substitution
• C. diminishing marginal utility
• D. increasing marginal Utility

Answer 1

The correct option is A marginal Rate of substitution

The indifference curve is a combination of two goods which would give the consumer the same amount of utility. Every point on the indifference curve would be a point where the consumer is indifferent. The indifference curve is downward sloping because for the consumer to purchase of more of some good, it has to give up some of another good.