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Question
The slope of the indifference curve is equal to ______.
Options
one
marginal utility
marginal rate of substitution
none of these
MCQ
Fill in the Blanks
Solution
The slope of the indifference curve is equal to marginal rate of substitution.
Explanation:
Indifference curve analysis is based on the assumption of diminishing marginal rate of substitution. This means that as the consumer substitutes more and more of one commodity (say X) for another commodity (say Y), he will be prepared to give up lesser units of the later (Y) for each additional unit of the former (X).
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