A Consumer Has Preferences Over Two Goods: X and Y

question 212

Multiple Choice

A consumer has preferences over two goods: x and y.Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with x on the horizontal axis and y on the vertical axis.At the consumer's current consumption bundle,the consumer is spending all available income,and the marginal rate of substitution is less than the slope of the budget constraint.We can conclude that

• A)the consumer is currently maximizing satisfaction.
• B)the consumer could increase satisfaction by consuming more x and less y.
• C)the consumer could increase satisfaction by consuming less x and more y.
• D)the consumer could purchase more x and more y and increase total satisfaction.

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Definitions:

Delayed Gratification

The skill to avoid succumbing to immediate pleasure, opting instead for a delayed but potentially greater reward.

Snake Wine

A traditional beverage in some Asian cultures, made by infusing whole snakes in rice wine or grain alcohol, believed to have healing properties.

Cultural Influences

The impact of cultural environment and practices on an individual's behaviors, values, and beliefs.

Familiarity

The state of being well-known or easily recognized, often through repeated exposure or experience.