An Optimizing Consumer Will Select the Consumption Bundle in Which

question 106

Multiple Choice

An optimizing consumer will select the consumption bundle in which the marginal rate of substitution

• A)is equal to the relative price ratio of the goods.
• B)exceeds the marginal utility of each good by the greatest amount.
• C)is less than the slope of the budget constraint.
• D)All of the above are correct.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the quantity of goods suppliers are willing to produce and the price of those goods.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service.

Demand

Demand refers to consumers' willingness and ability to purchase a product or service at a given price.

Supply Conditions

Factors that affect the quantity of a good or service that producers are willing and able to sell at a given price.