If the slope of the indifference curve is steeper than the slope of the budget line, and X is on the horizontal axis:
A. the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.
B. the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices.
C. MRS < ?PX/PY.
D. MRS < PX/PY.
Answer: A
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a. Accounting data must be translated from Chinese to English, and that is a difficult task. b. After 30 years of infant industry protection, the tariff on auto imports is still significant (a 25% tariff). c. China will probably never achieve exports, so whether any gains were made is unclear. d. Chinese consumers are exerting more market power, and they are opposed to any kind of import protection.
Long-run average cost is never greater than short-run average cost because in the long run,
A) capital costs equal zero. B) the firm can move to the lowest possible isocost curve. C) wages always increase over time. D) wages always decrease over time.