Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which law indicates that there is a tendency for the MRS to fall with increase in quantity of another commodity?

Options:

Law of diminishing marginal utility

Law of diminishing marginal rate of substitution

Law of variable proportion

Law of supply

Correct Answer:

Law of diminishing marginal rate of substitution

Explanation:

Taking an example, Law of diminishing marginal rate of substitution states that as we increase the quantity of bananas, the quantity of mangoes sacrificed for each additional banana declines. In other words, MRS diminishes with increase in the number of bananas