The Rate at Which a Consumer Is WILLING to Substitute

question 46

Multiple Choice

The rate at which a consumer is WILLING to substitute one good for another is measured by

• A) the indifference map.
• B) the slope of the budget line.
• C) the consumer's real income.
• D) the slope of the tangent to the indifference curve.

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Definitions:

Monthly Benefit

A regular payment received each month, such as from a pension or Social Security, designed to cover living expenses.

COLA

Cost-of-Living Adjustment; an increase in income or benefits designed to offset inflation and maintain purchasing power.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

APR

Annual Percentage Rate, a measure that reflects the cost of borrowing on loans or credit cards or the yield from an investment, including interest and other fees.