At a point on your budget constraint line, we find that your MRS at that point i

Question

1. At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   Answer You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are currently at the optimal (best affordable) consumption bundle. You should increase the consumption of good 1 and decrease the consumption of good 2. Both B and D.
   
   
   
2. Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. Answer increase; also increase decrease; also decrease increase; decrease decrease; increase

1. At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   Answer You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are currently at the optimal (best affordable) consumption bundle. You should increase the consumption of good 1 and decrease the consumption of good 2. Both B and D.
   
   
   
2. Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. Answer increase; also increase decrease; also decrease increase; decrease decrease; increase

At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   Answer You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are currently at the optimal (best affordable) consumption bundle. You should increase the consumption of good 1 and decrease the consumption of good 2. Both B and D.


At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   At a point on your budget constraint line, we find that your MRS at that point is less than the slope of the budget constraint, this suggests that ___________.   You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are currently at the optimal (best affordable) consumption bundle. You are currently at the optimal (best affordable) consumption bundle. You are currently at the optimal (best affordable) consumption bundle. You should increase the consumption of good 1 and decrease the consumption of good 2. You should increase the consumption of good 1 and decrease the consumption of good 2. You should increase the consumption of good 1 and decrease the consumption of good 2. Both B and D.


Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. Answer increase; also increase decrease; also decrease increase; decrease decrease; increase Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. Suppose that you are currently consuming your optimal (best affordable) consumption bundle and both good 1 and good 2 are normal goods. If the price of good 1 (on the x-axis) decreases, the substitution effect would ________ your consumption of good 1 and the income effect would _________ your consumption of good 1. increase; also increase increase; also increase decrease; also decrease decrease; also decrease increase; decrease increase; decrease decrease; increase decrease; increase You are willing to give up more of good 2 for one unit of good 1 than what the market prices require. You are willing to give up less of good 2 for one unit of good 1 than what the market prices require. You are currently at the optimal (best affordable) consumption bundle. You should increase the consumption of good 1 and decrease the consumption of good 2. Both B and D.

Explanation / Answer

decrease; also decrease

You are willing to give up less of good 2 for one unit of good 1 than what the market prices require.

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