What is the key assumption about a consumer's marginal rate of substitution?
What will be an ideal response?
The key assumption about the marginal rate of substitution is that it is diminishing as a consumer moves down an indifference curve, creating the bowed-in shape.
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The impact of an increase in the gasoline tax on SUV sales is
A) a macroeconomics topic because it deals with taxes. B) a microeconomics topic because it deals with one industry. C) not an economic issue, but rather a political issue. D) insignificant.
Which of the following is NOT a necessary condition for a firm to price discriminate?
A) The firm must be able to separate markets. B) Buyers in different markets must have different elasticities of demand. C) Resale of the product must be preventable. D) The firm must be a price-taker.
The direct cost of debt depends on:
A. the interest rate. B. fiscal policy. C. the implementation lag. D. the amount of the deficit.
Real business cycle theory suggests that changes in
A. technology and resources affect productivity, and thus the long-run growth of aggregate supply. B. monetary policy is the single most important cause of macroeconomic instability. C. the velocity of money is gradual and predictable and thus able to accommodate the long-run changes in nominal GDP. D. investment spending will have a direct and significant effect on aggregate demand.