Adam is currently consuming a large quantity of orange juice and just a small amount of milk every day. Assuming an indifference curve with orange juice measured on the vertical axis and milk measured on the horizontal axis, we can conclude that Adam's marginal rate of substitution of orange juice for milk is:

a) high

b) zero

c) just about the same

d) low

d) Low

Step-by-step explanation:

Indifference curve is graph representing the product combinations thaT give consumer the same satisfaction level. It is a downward sloping, convex curve.

The slope of indifference curve (IC) is 'Marginal Rate of Substitution' (MRS). It represents the ratio of change in one good to change in other good, satisfaction level i. e IC remaining the same. This ratio can be represented in terms of marginal utilities of both the goods also.

MRS xy = d (y) / d (x) = MU (x) / MU (y) [MU = Marginal Utility]

Graphically mentioned: milk is on horizontal axis ( = good x), orange juice on vertical axis ( = good y). Also, consumer is currently consuming large quantity of orange juice & small quantity of milk. As per above details - consumer is on rightwards, downwards portion of IC. IC is flatter at this portion, flatter curve has less slope i. e low MRS.

Mathematically & conceptually : consumer consumes more milk (x), so he has less MU (x); & he consumes less juice, so he has more MU (y). Hence, MUx is low, MUy high & therefore, the slope = MRS is low. It implies consumer has more milk (x), less MU (x) & less juice (y), more MU (y). So, he is willing to sacrifise less amount of milk for an additional amount of juice.