Along a Given Indifference Curve, a Consumer Reduces the Quantity

question 110

Multiple Choice

Along a given indifference curve, a consumer reduces the quantity of one good in favor of more units of the other. In this situation

• A) the marginal rate of substitution falls.
• B) the marginal utility of the first rises and the marginal utility of the second good falls.
• C) Total utility rises.
• D) Both A and B are correct.

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Definitions:

Portfolio

A portfolio represents a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Compounded Semiannually

Interest calculation method where interest is added to the principal on a semiannual basis, leading to interest on interest in the second half of the year.

Quarterly Compounded

Interest calculation method where the accrued interest is added to the principal balance four times a year, allowing interest to be earned on interest.