Economics, 3rd Edition

marginal rate of substitution 

the rate at which a consumer is willing to trade one good for another

Notice that because the indifference curves are not straight lines, the marginal rate of substitution is 

not the same at all points on a given indifference curve.

Two Extreme Examples of Indifference Curves

The shape of an indifference curve tells us about the consumer’s willingness to trade one good for the 

other. When the goods are easy to substitute for each other, the indifference curves are less bowed; when 

the goods are hard to substitute, the indifference curves are very bowed. To see why this is true, let’s  

consider the extreme cases.