By selecting a bundle where MRS = MRT, the consumer is
A) achieving a corner solution.
B) reaching the highest possible indifference curve she can afford.
C) not behaving in an optimal way.
D) All of the above.
B
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A hailstorm kills all of the wheat in Minnesota. What will happen to the price and quantity of wheat sold in the U.S.?
A. Equilibrium price falls, equilibrium quantity falls. B. Equilibrium price rises, equilibrium quantity falls. C. Equilibrium price rises, equilibrium quantity rises. D. Equilibrium price falls, equilibrium quantity increases.
Economists assume that when there is a change in supply and/or demand, the market clearing price returns to the equilibrium
A) quickly. B) slowly. C) after a protracted negotiation process. D) after an adjustment period.
At the $180 billion equilibrium level of income, saving is $38 billion in a private closed economy. Planned investment must be:
A. $138 billion. B. $126 billion. C. $38 billion. D. $180 billion.
If an increase in income results in a rightward parallel shift of the demand curve, then at any given price, the price elasticity of demand will have
A) increased in absolute terms. B) decreased in absolute terms. C) remained unchanged. D) increased, decreased or stayed the same. It cannot be determined.