A Consumer Allocates All Income Between Two Products, a and B

question 120

Multiple Choice

A consumer allocates all income between two products, A and B. If, on an indifference map, the equilibrium position shifts onto a higher indifference curve, then

• A) the consumer must be purchasing more of both products.
• B) the relative prices of A and B must have changed.
• C) the prices of A and B must have increased.
• D) total utility must have increased.

---

Definitions:

Regular Time Cost

The cost associated with normal working hours, including wages for employees and operational expenses incurred during standard business hours.

Over Time Cost

The additional expenses incurred when employees work beyond their regular hours, often including higher wage rates for overtime hours.

Marginal Subcontracting Cost

The additional cost incurred for each unit produced or service provided when a company resorts to subcontracting as opposed to in-house production.

Layoff Cost

Expenses associated with terminating employees, including severance pay and benefits continuation.