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Questions and Answers
What does a negative slope of an indifference curve indicate?
What does a negative slope of an indifference curve indicate?
- Consuming more of one commodity leads to consuming more of the other commodity.
- Consuming less of one commodity leads to consuming less of the other commodity.
- As less of one commodity is consumed, more of the other commodity must be consumed to maintain utility. (correct)
- There is no relationship between the consumption of the two commodities.
Why do indifference curves never intersect?
Why do indifference curves never intersect?
- Points of intersection are not relevant for consumer decision-making.
- Intersecting indifference curves represent different levels of utility. (correct)
- Intersecting curves lead to an inconsistency in utility measurement.
- Intersecting curves imply a change in consumer preferences.
How is the law of diminishing marginal rate of substitution confirmed?
How is the law of diminishing marginal rate of substitution confirmed?
- By inspecting Figure 4.6 and observing the trend in utility levels. (correct)
- By comparing the prices of the goods.
- By analyzing the consumer's budget constraints.
- By calculating the total utility derived from consuming both goods.
What is violated if an indifference curve touches either axis?
What is violated if an indifference curve touches either axis?
In the context of indifference curves, why is intersecting not allowed?
In the context of indifference curves, why is intersecting not allowed?
What happens if two indifference curves intersect at a point?
What happens if two indifference curves intersect at a point?
What concept explains the decrease in the rate at which a consumer is willing to substitute one good for another?
What concept explains the decrease in the rate at which a consumer is willing to substitute one good for another?
In consumer theory, which of the following is a fundamental assumption related to consumer preferences?
In consumer theory, which of the following is a fundamental assumption related to consumer preferences?
Why is the law of diminishing marginal rate of commodity substitution important in consumer choice theory?
Why is the law of diminishing marginal rate of commodity substitution important in consumer choice theory?
What concept in economics is directly related to the idea that consumers will always prefer more goods to less given their income and prices?
What concept in economics is directly related to the idea that consumers will always prefer more goods to less given their income and prices?
In consumer theory, what does the axiom of transitivity imply about consumer preferences?
In consumer theory, what does the axiom of transitivity imply about consumer preferences?
How does the law of diminishing marginal rate of commodity substitution impact consumer utility?
How does the law of diminishing marginal rate of commodity substitution impact consumer utility?
What does the law of diminishing marginal rate of commodity substitution state?
What does the law of diminishing marginal rate of commodity substitution state?
What is the relationship between the marginal rate of transformation (MRT) and the opportunity cost of producing goods?
What is the relationship between the marginal rate of transformation (MRT) and the opportunity cost of producing goods?
How is economic growth represented on a production possibilities curve (PPC)?
How is economic growth represented on a production possibilities curve (PPC)?
On an indifference curve, what does the law of diminishing marginal rate of commodity substitution imply?
On an indifference curve, what does the law of diminishing marginal rate of commodity substitution imply?
How does the opportunity cost change when moving from output X to output Y on a PPC?
How does the opportunity cost change when moving from output X to output Y on a PPC?
In Figure 1.3, what does the outward shift in the production possibilities curve (PPC) represent?
In Figure 1.3, what does the outward shift in the production possibilities curve (PPC) represent?
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