If an individual's indifference curve map does not obey the assumption of a diminishing MRS, then:
a. the individual will not maximize utility.
b. the individual will buy none of good x.
c. tangencies of indifference curves to the budget constraint may not be points of utility maximization.
d. the budget constraint cannot be tangent to an appropriate indifference curve.
c
You might also like to view...
The figure above shows a nation's consumption function. If disposable income is $4 trillion, then the MPC is ________ and saving is ________
A) negative; positive B) positive; positive C) positive; zero D) negative; negative E) positive; negative
Government purchases of goods and services
a. consist of current output of goods and services purchased by the federal government only. b. includes the current output of goods and services bought by the federal, state, and local governments. c. are the largest component of gross national product. d. include both defense spending and spending on social security.
If a 1 percent change in income generates a greater than 1 percent change in quantity demanded for boat rentals, then the demand for boat rentals
a. is a good illustration of Engel's law b. reflects the demand for an inferior good c. has a price elasticity greater than one d. is income elastic e. is income inelastic
Assume that the t-shirt industry is perfectly competitive. If the industry is in long-run equilibrium when the market price of t-shirts is $10:
A. minimum average variable cost equals marginal cost. B. minimum long-run average total cost is less than $10. C. minimum long-run average total cost is $10. D. marginal cost exceeds $10.