Figure 5-13 -If the Slope of an Indifference Curve Between Two Goods

question 131

Multiple Choice

Figure 5-13
-If the slope of an indifference curve between two goods decreases as we move from left to right (dropping all minus signs) , we infer that the consumer

• A)is less willing to trade away a good when he has a lot of it.
• B)is more willing to trade away a good when he has a lot of it.
• C)always tries to keep the percentage of his budget spent on each good constant.
• D)views one of the goods as inferior.

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Definitions:

Allocative Efficiency

A state of the market where resources are allocated in a way that maximizes the overall benefit to society, where the price of a good equals the marginal cost of production.

Monopoly Behavior

The actions of a firm that is the sole provider of a good or service, often involving price setting and market control.

Monopoly Structure

A market structure characterized by a single seller that controls the whole industry, leading to a lack of competition and high prices for consumers.

Relevant Market

The market in which a particular product or service is sold, considering the competition and the demand of consumers.