Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Read the following statements -
Assertion (A) and Reasoning (R):
Assertion: Indifference curve can be a straight line, rather than being convex to the origin.
Reasoning: In case of goods being perfect substitutes, the marginal rate of substitution does not diminish rather it remains same.
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).

 

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is not the correct explanation of Assertion (A). 

Assertion (A) is true but Reasoning (R) is false.

Assertion (A) is false but Reasoning (R) is true.

Correct Answer:

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).

 

Explanation:

It may be mentioned that the law of Diminishing Marginal Rate of Substitution causes an indifference curve to be convex to the origin. This is the most common shape of an indifference curve. But in case of goods being perfect substitutes, the marginal rate of substitution does not diminish, it remains same due to which the shape of the IC is linear.