Microeconomics,, 16th Canadian Edition

which says that the utility of additional consumption of some
product declines as the amount of that product consumed
increases.
11. Because the slope of the indifference curve is negative, it is the
absolute value of the slope that declines as one moves downward
to the right along the curve. The algebraic value, of course,
increases. The phrase diminishing marginal rate of substitution
refers to the absolute, not the algebraic, value of the slope.
12. The relationship between the slope of the budget line and relative
prices can be seen as follows. In the two-good example with
prices held constant, a change in expenditure (ΔE) is given by the
equation

Expenditure is constant for all combinations of F and C that lie on

the same budget line. Thus, along such a line we have

This implies

and thus

∂^2 U/∂Xi^2 < 0

ΔE=pC⋅ΔC+pF⋅ΔF

[12.1]

ΔE=

pC⋅ΔC+pF⋅ΔF= 0

[12.2]