Explain the following statement: For the same individual, tastes over goods may vary at the margin as we move from one bundle to another.
What will be an ideal response?
At the margin, tastes are characterized by the marginal rate of substitution --- which typically varies across an individual's indifference map. Thus, as the bundle changes, an individual feels differently about the way in which he would like to trade the goods off against one another. But the entire indifference map characterizes the individual's overall tastes --- so the same overall tastes allow for different tastes at the margin as we move across the indifference map.
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In the above table, if the marginal factor cost is $20, how many workers would be hired?
A) 3 B) 4 C) 5 D) 6
In the short-run macro model, aggregate expenditures are found by which of the following formulas?
a. AE = C + I + G + NX b. AE = Ip + T + S + G c. AE = C + Ip - T + NX d. AE = C + Ip + G + NX e. AE = C + Ip + G - NX
The study by economists Cox and Alm found that the 2006 pre-tax income of the richest fifth of U.S. households is
a. 5 times the pre-tax income of the poorest fifth. b. 10 times the pre-tax income of the poorest fifth. c. 15 times the pre-tax income of the poorest fifth. d. 20 times the pre-tax income of the poorest fifth.
Collusion is:
A. the act of firms working together to make decisions about price and quantity. B. buyers acting in unison against a company in efforts to change its practices. C. the act of firms undercutting one another in competition until zero profits are earned. D. None of these statements is true.