Question

State whether true or false:

An indifference curve is convex to the origin because of the law of equi-marginal utility.

Answer 1

This statement is false.

Reason:

• An indifference curve is convex to the origin because the marginal rate of substitution diminishes along it.
• The law of equi-marginal utility concerns how a consumer allocates income among goods to maximise satisfaction.
• The correct reason is the law of diminishing marginal rate of substitution.