Isoquants That Are Downward-Sloping Straight Lines Exhibit

question 100

Multiple Choice

Isoquants that are downward-sloping straight lines exhibit

• A) an increasing marginal rate of technical substitution.
• B) a decreasing marginal rate of technical substitution.
• C) a constant marginal rate of technical substitution.
• D) a marginal rate of technical substitution that cannot be determined.

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Definitions:

Real Wages

The purchasing power of wages or income, taking into account the effects of inflation on buying power.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

Economic Rent

The extra income earned by a resource over its opportunity cost.

Price of Gas

The cost per unit (usually per gallon or liter) of gasoline, which can vary based on factors like location, demand, and taxes.