When two goods are perfect substitutes, the marginal rate of substitution
a. is constant along the indifference curve.
b. decreases as the scarcity of one good increases.
c. increases as the scarcity of one good increases.
d. changes to reflect the consumer's changing preferences for the goods.
a
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Consumers in a country buy only two goods, pens and CDs. The prices and quantities purchased by urban households are in the table above. If 2011 is the reference base year, the cost of the CPI market basket in the base year is
A) $3,400. B) $3,408. C) $3,580. D) $3,508. E) $3,500.
The cost of holding money is best described as
A) the cost of printing money. B) the cost which price decreases impose on money holders. C) the yield which is paid to money holders by the U.S. government. D) the yield that could have been earned had the asset been held in another form.
A production function is a relationship between inputs and
a. quantity of output. b. revenue. c. costs. d. profit.
Vertical equity refers to the idea that
A. people with greater ability to pay should pay more. B. people who are situated differently should pay differently but in a manner deemed fair by society. C. people who are situated equally should pay equally. D. the people who derive the benefits from services should be the ones who pay for the services, provided they have the ability to pay.