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Q.

Why are Indifferences curves convex to the origin ________.

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a

Two goods are perfect complementary goods

b

Two goods are Imperfect substitutes

c

Two goods are perfect substitutes

d

None of the above 

answer is D.

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Detailed Solution

The indifference curve is convex to the origin in the case of two normal goods and is not convex in the case of inferior goods. This is because MRS(Marginal rate of Substitution) tends to diminish. And, MRS must diminish by the law of diminishing marginal utility.

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