Indifference Curves Cannot Be Concave to the Origin Because

question 236

Multiple Choice

Indifference curves cannot be concave to the origin because

• A) consumers generally will prefer to have more of a good than less of a good.
• B) the satisfaction consumers get from consuming additional units of a good declines.
• C) consumers must give up more of one good to obtain more of another good.
• D) the substitution effect holds across indifference curves.

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Definitions:

Market Price

The price at which a product or service is traded in the open market.

ATC

Average Total Cost, which is the total cost per unit of output produced, calculated by dividing the total cost by the quantity of output.

MR

Marginal Revenue, which is the additional income from selling one more unit of a good or service.

Profit-Maximizing

The process of increasing the financial gain of an entity as much as possible through various strategies and decisions.