If a Consumer's Budget Constraint Has a Slope That Is

question 49

Multiple Choice

If a consumer's budget constraint has a slope that is less than -1:

• A) the consumer gets more utility from good X than from good Y.
• B) the price of good X is less than the price of good Y.
• C) the consumer gets less utility from good X than from good Y.
• D) the price of good X is greater than the price of good Y.

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Definitions:

Residual Income

A measure of a company's profitability, calculated by subtracting the cost of capital from operating profits.

Minimum Required Rate

The lowest rate of return that an investment must yield to be considered acceptable.

Residual Income

Income that continues to be generated after the initial effort has been expended, or in managerial accounting, the operating income that an investment center earns above the minimum required return on its operating assets.

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, considering the risk involved.