In a Two-Good,one-Period Model,the Representative Consumer Will Always Be Better

question 8

Multiple Choice

In a two-good,one-period model,the representative consumer will always be better off

• A) with more consumption than less.
• B) with trade than without it.
• C) no comparative advantages.
• D) with a lower indifference curve than with a higher one.
• E) a flatter PPF.

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Definitions:

Commodity 2

Typically refers to a basic good used in commerce that is interchangeable with other goods of the same type.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given income and prices.

Commodity 1

A basic good used in commerce that is interchangeable with other goods of the same type, typically referred to when discussing market transactions.