The Following Diagram Shows One Indifference Curve Representing the Preferences

question 174

Multiple Choice

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer. What is the marginal rate of substitution between points A and B?

• A)1/2
• B)4/3
• C)2

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Definitions:

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded in a market.

Emissions Tax

A tax levied on companies for the pollutants they emit into the environment.

Pollution

The introduction of contaminants into the natural environment that cause adverse change, affecting air, water, and soil quality detrimentally.

Tradable Emissions Permits

A market-based system that allows entities to buy or sell government-granted allotments of pollutants, promoting cost-effective pollution reduction.