Answer:
Monotonic preferences refer to those consumer preferences where the consumer prefers those consumption bundles which have at least more of one good and no less of the other good than other consumption bundles. Suppose, there are two consumption bundles, bundle A (7, 5) and bundle B (3, 5). In this case, consumer preferences would be called monotonic if he prefers bundle A over bundle B. This is because bundled has more units of good 2 (i.e. 7 unit are compared to only 3 units in bundle B) and less of good 1. (i) An indifference curve is downward sloping from left to right because a consumer cannot simultaneously have more of both the goods. An increase in the quantity of one good is associated with the decrease in the quantity of the other good. This is in accordance with the assumption of monotonic preferences. (ii) An indifference curve is convex to the origin because of diminishing MRS. As the consumer consumes more and more of one good, the marginal utility of the good falls. On the other hand, the marginal utility of the good which is sacrificed rises. In other words, as the consumer consumes more of one good he is willing to sacrifice less and less of other good for each additional unit of the good. Thus, as we move down the 1C, MRS diminishes. This confirms the convex shape of the indifference curve.
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