Explain whether each of the following statements is true or false. The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Ps, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is â—‹ A. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve â—‹B. P. true because the MRS equals p, which increases as an individual moves downward along the demand curve. P. true because the MRS equals p, which decreases as an individual moves downward along the demand curve. 0 D. false because the MRS is constant as an individual moves downward along an indifference curve. O E. false because the MRS diminishes as an individual moves upward along the demand curve

The marginal rate of substitution slopes downward along the demand curve. The given statements is true as the MRS is equal to the ratio price of good X and good Y. the ratio decreases when the individual moves downward along the demand curve. Thus, option C is correct.

The level of utility increases as individual moves downward along the demand curve. The statement is true because the fall in price causes the budget line to pivot outward and the consumer is able to move to a higher indiffference curve. Thus, option A is correct.

An engel curve shows the quantity of one good purchased at different income levels. the given statament is false because in case of inferior goods the Engel curve slopes downward.

Thus, option E is correct.