In Order to Identify a Consumer's Demand Curve from an Optimal

question 69

Multiple Choice

In order to identify a consumer's demand curve from an optimal choice diagram we:

• A)change the consumer's income, holding the prices of both goods constant, and identify the baskets the consumer chooses with each income level.
• B)change the price's of both goods, holding income constant, and identify the baskets the consumer chooses with each price level.
• C)change the price of one good, holding income and the price of the other good constant, and identify the baskets the consumer chooses with each price level.
• D)change the price of one good and then change the income level so that the consumer achieves the same level of utility as before the price change and then identify the optimal consumption baskets at each price level.

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Definitions:

Balance Of Payments

A record of all economic transactions between residents of a country and the rest of the world in a given period.

Foreign Currencies

Money or other forms of payment issued by a country other than one's own, used to facilitate international transactions.

Balance Of Trade

The difference between the value of a country's exports and the value of its imports over a certain period, reflecting the country's trade surplus or deficit.

Current Account Deficit

When a country's total imports of goods, services, and transfers exceed its total exports.