A Constant Marginal Rate of Substitution Between Two Goods Implies

question 83

Multiple Choice

A constant marginal rate of substitution between two goods implies

• A)the goods are perfect complements.
• B)the goods are imperfect substitutes.
• C)the goods are both inferior.
• D)one good is normal and one good is inferior.
• E)the goods are perfect substitutes.

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Definitions:

Equilibrium Level

The condition where the supply and demand in the market are equal, leading to steady prices and quantities.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.

Quantity Supplied

The total amount of a good or service that sellers are willing and able to sell at a given price level, at a specific time.