When Indifference Curves Are Bowed in Toward the Origin

question 63

Multiple Choice

When indifference curves are bowed in toward the origin,

• A)a consumer is less inclined to trade away goods they are lacking.
• B)a consumer's willingness to trade away goods they have in abundance diminishes.
• C)an increase in income will shift the indifference curve away from the origin.
• D)a decrease in income will shift the indifference curve away from the origin.

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Definitions:

Interest Rate

The share of a loan incurred as interest costs to the borrower, habitually depicted as an annual percentage of the loan's outstanding amount.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the proportion of any additional dollar of income that must be paid in taxes.

Weighted Average Cost

A calculation that takes into account the varying costs of goods or services by weighting them according to their importance or quantity.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project zero.