Answer the following statements true (T) or false (F)
1. A parallel shift in a budget line is caused by changes in a consumer's level of satisfaction.
2. A change in the relative prices for two goods can be shown as a parallel shift in a consumer's budget line.
3. Indifference curves are convex to the origin due to diminishing marginal rates of substitution.
4. Indifference curves and budget lines can be used to derive an individual's demand curve for a product.
1. FALSE
2. FALSE
3. TRUE
4. TRUE
You might also like to view...
Which of the following is false with reference to subsidies? a. They reduce the cost of production
b. They transfer the income from tax payers to the exporters. c. They mean the nation is exporting products in which it does not have comparative advantage. d. They can lead to inefficiencies.
In the classical model, beginning from an equilibrium in which the government is running a budget surplus
a. the supply of loanable funds will be horizontal b. an increase in government spending will cause the interest rate to rise c. the supply of loanable funds will be vertical d. an increase in government spending will crowd out less than an equal amount of private spending e. a decrease in government spending will crowd out less than an equal amount of private spending
Government investment includes all purchases of long-lived assets such as tanks and planes.
Answer the following statement true (T) or false (F)
Resources are being used efficiently when:
A) they are also used equitably. B) there are still gains from trade available. C) scarcity is no longer an issue. D) every opportunity to make people better off has been utilized.