At the Optimal Consumption Bundle, the Marginal Rate of Substitution

question 47

Multiple Choice

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

• A) the real wage and the budget line is tangent to an indifference curve.
• B) minus the real wage and the budget line is tangent to the indifference curve.
• C) the real wage and the budget line intersects the indifference curve.
• D) minus the real wage and the budget line intersects the indifference curve.
• E) the real wage and on the highest possible indifference curve.

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Definitions:

Maturation

The process of development in which an individual matures or reaches a full or advanced stage of physical and emotional growth.

Birth Cohort

A group of people who were born during the same period of one or several years and who are, therefore, all exposed to particular historical events at approximately the same age.

Fixed Ratio

In operant conditioning, a schedule of reinforcement where a response is rewarded after a set number of responses.

Variable Interval

In operant conditioning, a reinforcement schedule where responses are rewarded after unpredictable time intervals.