When the consumer is at his or her best affordable consumption point, it is the case that the marginal rate of substitution is
A) greater than the price ratio.
B) equal to the price ratio.
C) less than the price ratio.
D) maximized.
B
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In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X
A) country A has an absolute advantage. B) country B has an absolute advantage. C) country A has a comparative advantage. D) country B has a comparative advantage.
In the short run, perfectly competitive firms ________ but in the long run, perfectly competitive firms ________
A) can incur an economic loss; incur an economic loss B) can incur economic losses; make an economic profit C) must make an economic profit; make an economic profit D) can incur an economic loss; make zero economic profit
In the simple Keynesian model, equilibrium exists when
a. actual investment equals realized investment. b. exports equal imports. c. savings is equal to government spending plus desired investment minus taxes. d. national product is equal to consumption minus desired investment plus government spending. e. None of the above
The model of aggregate demand and aggregate supply can NOT be used to:
A. discuss the pros and cons of income tax cuts. B. evaluate a tax cut's effect on short run economic fluctuations. C. assess a tax cut's effect on longer run issues such as the national debt. D. to discuss income distribution.