At Consumer Equilibrium Between Goods F and C, All of the Following

question 45

Multiple Choice

At consumer equilibrium between goods F and C, all of the following statements is true except one.Which is the exception?

• A)MU_F/MU_C = P_F/P_C
• B)MRS = -P_F/P_C
• C)MRS = the absolute value of the slope of the budget line
• D)utility is maximized subject to the budget constraint
• E)P_F/P_C = TU_F/TU_C

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of consumers increases, and vice versa.

Complementary Goods

Products or services that are typically consumed together, where the increase in demand for one leads to an increase in demand for the other.

Substitute Goods

Products or services that can be used in place of each other, where the increase in the price of one leads to an increase in demand for the other.

Independent Goods

Products whose demand is not influenced by the price or availability of other goods.