Ambrose Has Indifference Curves with the Equation X₂ = Constant

question 17

Multiple Choice

Ambrose has indifference curves with the equation x₂ = constant - , where larger constants correspond to higher indifference curves. If good 1 is drawn on the horizontal axis and good 2 on the vertical axis, what is the slope of Ambrose's indifference curve when his consumption bundle is (9, 5) ?

• A) -0.67
• B) -8
• C) -9/5
• D) -5/9
• E) -3

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Definitions:

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.

Relevant Range

The range of activity within which assumptions made about cost behavior are valid. Beyond this range, fixed and variable cost patterns may change.

Break-even Point

The level of sales or production at which total revenues equal total costs, resulting in neither profit nor loss.

Contribution Margin

The selling price of a product minus the variable cost per unit, used to cover fixed costs and contribute to net profit.