Explain why most indifference curves are convex
What will be an ideal response?
Diminishing marginal rates of substitution make most indifference curves convex. When people have a lot of one good, they are willing to give up a relatively larger amount of it to get a good of which they have relatively little.
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In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars?
a) an increase in the exchange rate. b) an increase in the U.S. interest rate. c) a fall in the expected future exchange rate.
A perfectly competitive firm will earn a positive economic profit so long as price is greater than average total cost at the profit-maximizing level of output
Indicate whether the statement is true or false
The subprime financial crisis caused a recession because of the ________ in adverse selection and moral hazard problems and the ________ in housing prices
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
The macroeconomic models that are most supportive of the role of government policy aimed at smoothing business cycles are
A) real business cycle models. B) endogenous growth models. C) Keynesian models. D) Solow growth models.