# Assumption of Convex Preferences

*… a core term used in Economic Analysis and Atlas102*

### Definition

The assumption of convex preferences is the assumption that consumers generally prefer “averaged” bundles rather than extremes and implies a diminishing marginal rate of substitution.

As noted in WikiBooks (reference below):

- Convex preferences imply diminishing marginal rates of substitution. For any two goods, increasingly large amounts of one good are required to compensate for marginal losses of the other
- Convex preferences may be interpreted as a desire for diversification in consumption

**Atlas topic, subject, and course**

Consumer Theory and Elasticity of Demand and Supply (core topic) in Economic Analysis and Atlas102 Economic Analysis.

###### Source

WikiBooks, Advanced Microeconomics – Preference Relations, at https://en.wikibooks.org/wiki/Advanced_Microeconomics/Preference_Relations#Convexity, accessed 12 May 2016.

**Page created by:** Ian Clark, last modified 18 May 2016.