Rate at Which a Consumer Is ABLE to Substitute One

question 68

Multiple Choice

rate at which a consumer is ABLE to substitute one good for another is determined by

• A)the indifference map.
• B)the marginal rate of substitution.
• C)the consumer's income.
• D)the budget line.

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Definitions:

Supply Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity supplied by producers.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.

Producer Surplus

The difference between the amount producers are willing to sell their goods for and the actual amount they receive due to higher market prices.

Consumer Surplus

The gap highlighting the difference between the sum consumers intend to pay and what they actually fork out for a good or service.