Assume a consumer is currently purchasing a combination of goods, X and Y, that maximizes her utility given her budget constraint, i.e., MRSX,Y = PX/PY. Now assume that there is a decrease in the price of Y
In this case, to once again maximize her utility, the consumer will want to adjust her purchases of X and Y such that: A) the marginal rate of substitution of X for Y, i.e., MRSX,Y, decreases.
B) the marginal rate of substitution of X for Y, i.e., MRSX,Y, stays the same.
C) the marginal rate of substitution of X for Y, i.e., MRSX,Y, increases.
D) none of the above. The consumer will continue to maximize her utility after the price change by continuing to consume the same combination of X and Y.
C
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A positive-sum game occurs:
A. when the sum of the two firms' outcomes is positive. B. whenever any of the values in the payoff matrix are positive. C. when the gains received by one player are exactly offset by the losses to the other. D. whenever the payoffs to the two players are equal.
The slope of an indifference curve at all points reflects
A. the terms by which the consumer can trade off goods in the market. B. the relative prices of the two goods. C. the willingness of the consumer to trade one good for another. D. consumer income relative to the price of a good. E. the relative price ratio of the two goods.