Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which of the following is true in regards to indifference curve?

Options:

Upward sloping straight line

Downward sloping straight line

Concave to the origin

Convex to the origin

Correct Answer:

Convex to the origin

Explanation:

The correct answer is option 4: Convex to the origin

The law of "Diminishing Marginal Rate of Substitution" causes an indifference curve to be convex to the origin. Indifference curves are convex to the origin, reflecting the principle of diminishing marginal rate of substitution. This means that as a consumer substitutes one good for another, the amount of the good being given up increases while the quantity of the other good consumed also increases, leading to a curvature that bows inward.