Not yet answered ntsut of 1 Rag queston Question 6 Not yet answered Points out o

Question

Not yet answered ntsut of 1 Rag queston Question 6 Not yet answered Points out of 1 The consumption bundle that maximizes utility for a consuner is the bundle that Select one: O O 0 a. maximizes the marginal rate of substitution b. minimizes the costs of production. c, equates the slope of the budget constraint with the slope of the indifference curve. O d. maximizes marginal utility across all goods Question 7 The income effect is Select one Not yet answered Points out of 1 P Flag question a. the increase in the price of leisure caused by higher wages b. an increase in price caused by a change in market demand from an increase in income O c. the change in consumption caused by a change in purchasing power from a price change. d. represented by a pivot in the budget constraint from a change in price. Question 8 Ntyst nwred Points out of !Flag question Indifference curves can never cross. Select one: O True Q False

Explanation / Answer

Question 6

C. Consumer utility maximization occurs at the point of tangency of budget line with indifference curve. At this point, MRS equals the price ration of the two goods.

Question 7

c. Income effect. When price decreases, the purchasing power increases leading to higheri consumption.

Question 8

True. Indifference curves can never cross because higher indifference curves offer more utility. This principle will not hold true if the indifference curves cross.

Question 9

a. The individual has more income which he would use for leisure.

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