Use the Following Statements to Answer This Question: I

question 121

Multiple Choice

Use the following statements to answer this question: I. Following the properties of indifference curves, the utility possibilities frontier should be convex to (bowed into toward) the origin.
II) The slope of the utility possibilities frontier equals -1 times the slope of the contract curve.

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Disposable Income

The budgeting capacity for households in terms of saving and spending after income tax commitments.

Saving

The portion of income that is not spent on consumption but rather set aside for future use, often in investments or deposit accounts.

Disposable Income

The net income available to individuals or households after all taxes have been deducted, which can be spent on consumption or savings.

Autonomous Consumption

Represents the amount of consumption that occurs no matter the level of disposable income, indicating basic living expenses.