Which of the following is true at the exchange equilibrium between two individuals?
A) Their marginal rates of substitution are equal.
B) The slopes of the individuals' indifference curves are equal.
C) Both individuals' marginal rates of substitution are equal to the ratio of the prices of the goods.
D) A and B only
E) A, B, and C are all true.
E
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A firm uses two inputs, labor (L) and capital (K) in the production of umbrellas. It can invest $50,000 in the purchase of the two inputs annually. The firm hires 5 units of capital at $1,000 per unit. If the going annual wage rate is $4,500, calculate the number of workers employed by the firm. (Assume that the firm spends the entire budget on K and L.)
a. 10 b. 5 c. 15 d. 9
In comparison to the situation in the late 1970s, the United States experienced lower nominal interest rates and higher real interest rates in the late 1990s
a. True b. False Indicate whether the statement is true or false
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
The basic function of advertising, according to its proponents, is to assist consumers in making informed, rational choices.
Answer the following statement true (T) or false (F)