Question

What is a diminishing marginal rate of substitution?

Answer 1

The Diminishing Marginal Rate of substitution refers to the consumer's willingness to part with less and less quantity of one good in order to get one more additional unit of another good.

Explanation:

In Indifference curve analysis, assume a consumer consumes good-y and good-x. Good-Y is represented along the Y-axis and Good-X along the X-axis. As the consumer slides down from left to right along the indifference curve, he foregoes good-y and acquires good-x. The rate at which Good-Y is exchanged for Good-X is called marginal rate of substitution. This rate diminishes. Watch this video lesson