Indifference Curves Are Generally Convex to the Origin Because Of

question 38

Multiple Choice

Indifference curves are generally convex to the origin because of:

• A)the law of diminishing marginal utility.
• B)substitution and income effects.
• C)limitations of the economy in producing an ever-increasing amount of the commodities in question.
• D)the instability of individual human wants.
• E)none of the above.

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Definitions:

Consumer Price Index

An index that measures the change over time in the price of a basket of consumer goods and services, often used as a measure of inflation.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned through work.

Base Year

A specific year chosen as a point of reference for comparison over time in economic analysis.

CPI (Consumer Price Index)

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.