Suppose the Marginal Rate of Substitution of X for Y

question 5

Multiple Choice

Suppose the marginal rate of substitution of x for y is constant for all levels of and Goods and are

• A) perfect substitutes.
• B) perfect complements.
• C) normal goods.
• D) inferior goods.

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Definitions:

Accounts Receivable

Owed sums to a corporation by its customers for commodities or services furnished or taken advantage of, with the payment still forthcoming.

Tax Shield

A reduction in taxable income for an individual or corporation achieved through claiming allowable deductions such as interest on loans.

Noncash Expenses

Expenses recorded on an income statement that do not involve actual cash flow, such as depreciation or amortization.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one could have received by taking a different decision.