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A downward sloping linear IC indicates that the rate of MRSxy is- (a) diminishing (b) increasing (c) constant (d) zero?
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A downward sloping linear IC indicates that the rate of MRSxy is- (a) ...
MRSxy stands for Marginal Rate of Substitution between two goods, x and y. It is the amount of one good that a consumer is willing to give up in order to obtain an additional unit of the other good while remaining at the same level of satisfaction.

Explanation:

A downward sloping linear IC (indifference curve) represents the relationship between the two goods, x and y, that provide the same level of satisfaction to the consumer. The shape of the IC depends on the MRSxy.

Diminishing MRSxy:
If the MRSxy is diminishing, it means that the consumer is willing to give up fewer units of good x to obtain an additional unit of good y as the quantity of good y increases. In other words, the consumer is becoming less willing to trade good x for good y as they acquire more of good y. This results in a downward sloping linear IC.

Increasing MRSxy:
If the MRSxy is increasing, it means that the consumer is willing to give up more units of good x to obtain an additional unit of good y as the quantity of good y increases. In other words, the consumer is becoming more willing to trade good x for good y as they acquire more of good y. This results in an upward sloping linear IC.

Constant MRSxy:
If the MRSxy is constant, it means that the consumer is willing to give up the same amount of units of good x to obtain an additional unit of good y, regardless of the quantity of good y. This results in a linear IC that is neither upward nor downward sloping, but rather a straight line with a constant slope.

Zero MRSxy:
If the MRSxy is zero, it means that the consumer is not willing to trade any units of good x for an additional unit of good y, indicating that the two goods are perfect substitutes. This results in a linear IC that is a horizontal line.

In conclusion, a downward sloping linear IC indicates that the MRSxy is diminishing, meaning that the consumer is becoming less willing to trade good x for good y as they acquire more of good y.
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A downward sloping linear IC indicates that the rate of MRSxy is- (a) diminishing (b) increasing (c) constant (d) zero?
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A downward sloping linear IC indicates that the rate of MRSxy is- (a) diminishing (b) increasing (c) constant (d) zero? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A downward sloping linear IC indicates that the rate of MRSxy is- (a) diminishing (b) increasing (c) constant (d) zero? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A downward sloping linear IC indicates that the rate of MRSxy is- (a) diminishing (b) increasing (c) constant (d) zero?.
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