The Property of Diminishing Marginal Rate of Substitution Implies That

question 60

Multiple Choice

The property of diminishing marginal rate of substitution implies that

• A) the more current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
• B) the less current consumption the consumer has, the less future consumption she is willing to give up for one more unit of current consumption.
• C) the more current consumption the consumer has, the more future consumption she is willing to give up for one more unit of current consumption.
• D) the indifference curves are bowed away from the origin.
• E) the indifference curves have a constant slope.

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Definitions:

Break-Even Point

The juncture where a company's overall expenses match its total income, leading to neither a profit nor a loss.

Shutdown Point

The level of business operations where a company cannot cover its variable costs by producing, leading to a pause or cessation of production.

Break-Even Point

The point at which total costs and total revenue are equal, meaning no net gain or loss is incurred from production and sales.

Shutdown Point

The shutdown point is the level of production and price at which a company's revenue only covers its variable costs, and operating at any capacity below this point would cause the firm to incur losses.