If a Corner Solution Exists

question 21

Multiple Choice

If a corner solution exists,

• A)Marginal rate of substitution will always be equal to the slope of the budget constraint
• B)Marginal rate of substitution will always be less than the slope of the budget constraint
• C)Marginal rate of substitution will always be greater than the slope of the budget constraint
• D)None of the answer choices is correct

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Definitions:

Total Revenue

The total amount of money generated from the sale of goods or services before any costs or expenses are deducted.

Profit Maximized

A state or point at which a business achieves its highest possible profit with its current resources and market conditions.

Coffee Farm

A farm where coffee plants are cultivated for their beans.

Market Price

The present cost at which an item or service may be purchased or sold in a market setting.