When a Consumer's Marginal Rate of Substitution Between X and Y

question 46

Multiple Choice

When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then

• A)the budget line is tangent to an indifference curve.
• B)the consumer is not maximizing his utility.
• C)a higher indifference curve can be reached given the existing budget line.
• D)the budget line is tangent to the indifference curve at all quantities of X and Y.
• E)all budget lines are tangent to all indifference curves.

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Definitions:

Assimilation

The process of taking in new information into our previously existing schemas.

Accommodation

A cognitive process in Piaget's theory, where existing mental schemas are modified or new ones created in response to new information.

Clinical Method

A systematic approach in the medical field for diagnosing, treating, and observing patients.

Socratic

Pertaining to the Socratic method, an approach to teaching that uses question-and-answer dialogue to stimulate critical thinking and illuminate ideas.