The marginal rate of substitution:

A) may increase or decrease on a given indifference curve,depending on whether the substitution or the income effect is dominant.
B) increases as one moves southeast along an indifference curve.
C) is constant at all points on the budget line.
D) declines as one moves southeast along an indifference curve.

Marginal Rate

Often refers to the incremental increase in cost or benefit associated with a one-unit change in an economic activity.

Substitution

The economic principle where consumers replace more expensive items with less costly alternatives, or when firms swap higher-priced inputs with cheaper resources.

Income Effect

The change in consumption resulting from a change in real income.