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19. Suppose good X is measured on the horizontal axis and good Y on the vertical axis. The marginal rate of substitution is best defined as the A) slope of the budget line. rate at which a person gives up good X to get more of good Y and remains indifferent. rate at which a person gives up good Y to get more of good X and remains indifferent. relative price of good Y in terms of good X relative price of good X in terms of good Y. D) E)

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Related questions

23) Good X is measured on the horizontal axis and good Y is measured on the vertical axis. The marginal rate of substitution is A) the relative price of good X in terms of good Y. B) the relative price of good Y in terms of good X. C) the rate at which a consumer will give up good Y to obtain an additional unit of good X while remaining indifferent. D) the rate at which a consumer will give up good X to obtain an additional unit of good Y while remaining indifferent. E) equal to the magnitude of the slope of the budget line.

1. Assume that beer is an inferior good for Wei. If the price of beer goes up, then the total effect results in Wei buying _______ beer and the substitution effect results in Wei buying ______ beer.

a.

more, more

b.

more, less

c.

less, more

d.

less, less

e.

not enough information to determine

2. A consumer has preferences that are complete, transitive and satisfy the "more is better" property. Which of the following statements are necessarily true?

a.

Indifference curves are negatively sloped.

b.

Indifference curves do not cross.

c.

Indifference curves exhibit diminishing marginal rates of substitution.

d.

Both a) and b) are true.

e.

a), b), and c) are true.

3. Suppose an individual has preferences over two goods - good X and good Y. In response to changes in the price of good X, the individual has a positively sloped price consumption curve, where good X is drawn on the horizontal axis. Which of the following statements is true?

a.

Good Y is a normal good.

b.

Good Y is a Giffen good.

c.

Good Y is a complement for good X.

d.

Good Y is an inferior good.

e.

Good Y is a substitute for good X.

Characterize utility maximization. When consumers maximize​ utility,

A. they consume each good up to the point where the marginal utility per dollar spent is the same for each good.

B. the marginal rate of substitution equals the price of the good on the horizontal axis divided by the price of the good on the vertical axis at the point of optimization.

C. the slope of the indifference curve equals the slope of the budget constraint at the point of optimization.

D. all of the above.

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