What is the rationale for the slope of an indifference curve in a two-product (A and B) case?
Please provide the best answer for the statement.
The slope of the curve measures the marginal rate of substitution of one good for the other (B for A) for the consumer to have a constant level of satisfaction. The rationale for this shape is related to diminishing marginal utility. If the consumer has many units of A and few units of B, B is more valuable at the margin while A has a lower marginal utility. The consumer will then be willing to give up more of A to get more units of B. This relationship changes, however, as the consumer gets more and more of B and gives up more and more A. In this case, the consumer will not be willing to give up many units of A to obtain more units of B. This situation means that the slope of the curve diminishes. It is thus convex to the origin.
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Refer to Table 13-9. Suppose that the data in the table above reflects the price levels in the economy. Given that data, we can say that the cost of living rose by ________ between 2012 and 2013?
a. 2%
b. 5%
?. 8%
d. 11%
e. 13%
Capital rationing
A) exists when a company sets an arbitrary limit on the amount of investment it is willing to undertake, so that not all projects with an NPV higher than the cost of capital will be accepted. B) generally does not permit a company to achieve maximum value. C) seems to occur quite frequently among corporations. D) All of the above
Demand for Shell gasoline will increase if the price of:
A. Motor vehicles increases. B. BP gasoline increases. C. BP gasoline decreases. D. Shell gasoline decreases.
The monetary base includes:
A. currency and cash plus commercial bank deposits at the Fed. B. vault cash plus checkable deposits. C. currency and coin in circulation plus checkable deposits. D. currency and coin in circulation only.