The Consumer Is in Equilibrium When

question 28

Multiple Choice

The consumer is in equilibrium when

• A) MRT = MRS.
• B) Pₓ/Pᵧ = MUₓ/MUᵧ.
• C) the budget line is tangent to the indifference curve at the bundle chosen.
• D) All of the above.

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Definitions:

Self-perception Theory

A concept suggesting people develop attitudes and opinions by observing their own behavior and concluding what attitudes must have caused it.

Evolutionary Theory

A scientific theory that explains the diversity of life on Earth by means of natural selection, where organisms better adapted to their environment tend to survive and produce more offspring.

Social Identity Theory

The view that social identity is a crucial part of self-image and a valuable source of positive feelings about oneself.

Cognitive Dissonance Reduction

The process of resolving the discomfort caused by holding two or more conflicting cognitions (beliefs, attitudes) by changing, adding, or minimizing one of the discordant factors.