A budget line describes:
a. the alternative combinations of two goods that a buyer can purchase with a given money income
b. the alternative combinations of two goods that will yield the same level of total satisfaction to a consumer
c. the quantities of a particular good that a consumer will purchase at various prices
a. the alternative combinations of two goods that a buyer can purchase with a given money income
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Which of the following statements is true?
A) If higher water prices encourage a landlord to place bricks in the water tanks of his toilets to reduce water usage, then for him bricks are substitutes for water. B) If higher gasoline prices encourage a potential vacationer to stay at home and read a good book by the fire, rather than drive through the country, then for her firewood is a substitute for gasoline. C) Both A and B are true. D) None of the above are true.
If ft denotes the forecast of yt+1 made at time t, then the forecast error is given by:
A. et+1 = ft/yt+1. B. et+1 = yt+1/ft. C. et+1 = yt+1 + ft. D. et+1 = yt+1- ft.
The difference between the maximum amount that a consumer is willing to pay for a product and the price that is paid for the product describes:
A. consumer surplus. B. the cost of producing a unit of the product. C. marginal utility. D. producer surplus.
A factor that helps to determine the demand for the dollar in the foreign exchange market is
A) the expected future exchange rate. B) the expected future interest rate. C) the amount of U.S. imports. D) the supply of U.S. dollars.