A Consumer Satisfies the Condition MU_x/P_x = MU_y/P_y When His

question 60

Multiple Choice

A consumer satisfies the condition MU_x/P_x = MU_y/P_y when his indifference curve ________ his budget constraint.

• A) is completely above
• B) is completely below
• C) is just tangent to
• D) crosses

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Definitions:

Net Pay

The amount of money an employee takes home after deductions like taxes and retirement contributions have been subtracted.

FICA Tax

A mandatory tax used to fund the United States Social Security and Medicare programs, deducted from the wages of employees.

Federal Income Tax

A tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Withholding Allowance

A claim made by an employee on a W-4 form to reduce the amount of tax withheld from their paycheck.