Suppose When Real Disposable Income Is $5000, Planned Real Consumption

question 182

Multiple Choice

Suppose when real disposable income is $5000, planned real consumption is $4000. When real disposable income increases to $6000, planned real saving increases by $500. The new planned real consumption expenditures is

• A) $5,000.
• B) $4,500.
• C) $6,000.
• D) $3,500.

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Definitions:

Isocost Curve

An isocost curve represents all combinations of inputs which result in the same total cost for a firm, essentially showing the trade-offs between different types of inputs while maintaining the same budget.

Wage Rate

The amount of money paid to an employee per unit of time worked, often expressed per hour or year.

Rental Cost

The price paid for the temporary use of a good, service, or property owned by another party.

Optimal Combination

An optimal combination refers to the selection of goods, services, or inputs that provides the highest satisfaction or return for a given cost or the lowest cost for a given level of satisfaction or output.