Suppose at the Consumer's Current Consumption Bundle the Marginal Rate

question 97

Multiple Choice

Suppose at the consumer's current consumption bundle the marginal rate of substitution of cheese for wine is 1/2 bottle of wine per pound of cheese. The price of one pound of cheese is $6, and the price of a bottle of wine is $10. The consumer should increase his consumption of

• A)cheese, decrease his consumption of wine, and move to a lower indifference curve.
• B)cheese, decrease his consumption of wine, and move to a higher indifference curve.
• C)wine, decrease consumption of cheese, and move to a higher indifference curve.
• D)cheese, decrease consumption of wine, and remain on the same indifference curve.

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Definitions:

Infinite Population

A theoretical concept where the population size is considered unlimited or endlessly large for statistical analysis.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, which can be used to make inferences about a population.

Central Limit Theorem

A theorem that enables one to use the normal probability distribution to approximate the sampling distribution of x whenever the sample size is large.

Infinite Population

A hypothetical population of unlimited size, often used in statistical modeling to simplify analysis.