Figure 21-13 -Refer to Figure 21-13. What Is the Consumer's Marginal Rate

question 277

Multiple Choice

Figure 21-13
-Refer to Figure 21-13. What is the consumer's marginal rate of substitution as she moves from B to C?

• A)4
• B)2
• C)1
• D)0.5

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Definitions:

Externalities

Costs or benefits arising from an economic activity that affect third parties who did not choose to incur that cost or benefit.

Socially Optimal

A condition where resources are allocated in the most efficient way from the society's point of view, maximizing overall welfare.

Common Resource

A resource like air or water that is not owned by anyone, can be used by everyone, and is difficult to exclude others from using.

Artificially Scarce Good

A product or service whose supply is intentionally restricted to increase its price or value, often contrary to its natural abundance.