Statement: "Indifference curve analysis is based on the assumption of diminishing marginal rate of substitutiins. This means that as the consumer substitutes more and more of one commodity (say X) for another commodity (say Y), he/she will be prepared to give up lesser units of the later (Y) for each additional unit of the former (X)."

Shouldn't the consumer be more willing to give up Y for X, now that she has more of Y? Also, under the topic 'Properties of an Indifference Curve', we are told (in our textbook) that the IC curve is based on the diminishing marginal rate of substitution because "the lesser is the amount of one commodity consumed by a household, the lesser willing the household will be to give up a unit of that commodity to obtain an additional unit of the other commodity". Doesn't that kind of contradict the statement I quoted earlier? PLEASE HELP!


closed as off-topic by emeryville, Theoretical Economist, Giskard, Herr K., JoaoBotelho Mar 15 '18 at 12:57

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "This question does not meet the standards for homework questions as spelled out in the relevant meta posts. For more information, see our policy on homework question and the general FAQ." – emeryville, Theoretical Economist, Giskard, Herr K., JoaoBotelho


Here's how it works:

We assume that marginal utility is diminishing for both goods. Then, as a consumer consumes a higher level of Y, he is willing to give up more Y to get a unit of X.

So you are correct; the first statement is wrong. As you noted, the second statement (less Y, less willingness to give up Y for X) contradicts the first, and the second is true.


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