Which of the following statements is correct? a. The optimal choice for a consumer who is maximizing her utility would equate marginal rate of substitution and marginal rate of tra... Which of the following statements is correct? a. The optimal choice for a consumer who is maximizing her utility would equate marginal rate of substitution and marginal rate of transformation. b. Because of scarcity of resources, average income and standard of living have declined over time. c. Opportunity cost is the monetary cost of choosing an action over an alternative. d. Indifference curves show all combinations of goods that are within the budget of the consumer.
Understand the Problem
The question is asking which statement regarding economic concepts is correct, focusing on consumer behavior, utility maximization, opportunity costs, and indifference curves.
Answer
a. The optimal choice for a consumer who is maximizing her utility would equate marginal rate of substitution and marginal rate of transformation.
The final answer is a. The optimal choice for a consumer who is maximizing her utility would equate marginal rate of substitution and marginal rate of transformation.
Answer for screen readers
The final answer is a. The optimal choice for a consumer who is maximizing her utility would equate marginal rate of substitution and marginal rate of transformation.
More Information
The marginal rate of substitution and marginal rate of transformation align at optimal points of consumption under perfect competition, ensuring utility maximization.
Tips
A common mistake is misunderstanding the role of indifference curves, which express equal utilities, not budget constraints.
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