The marginal rate of substitution is the
A) rate at which the consumer can exchange one good for the other.
B) change in the quantity of one good that just offsets a one-unit change in the consumption of another good such that the total satisfaction remains constant.
C) change in the quantity of one good that changes the utility received by one unit.
D) same thing as the marginal utility of a good.
Ans: B) change in the quantity of one good that just offsets a one-unit change in the consumption of another good such that the total satisfaction remains constant.
You might also like to view...
Suppose we examine how the consumer's optimum changes when the price of good X changes, while the consumer's tastes, income, and the price of all other goods are held constant. This procedure is used to derive
a. the Engel curve for good X. b. the (ordinary) demand curve for good X. c. the compensated demand curve for good X. d. the substitution and income effects for good X.
If the Fed's monetary policy reaction function does not change, then when inflation increases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.
A. increasing; increases; decreases B. decreasing; decreases; decreases C. increasing; decreases; decreases D. increasing; increases; increases
A price searcher can move its marginal revenue curve closer to its demand curve if it can
A) achieve significant economies of scale. B) charge different buyers different prices for the same good. C) price at the point of unit demand elasticity. D) produce at constant marginal cost. E) set marginal revenue equal to marginal cost.
National income is equal to gross domestic product minus:
a. indirect business taxes. b. depreciation. c. personal taxes. d. retained earnings. e. consumption spending.