If an Inverse Relationship Exists Between Two Variables, Then

question 392

Multiple Choice

If an inverse relationship exists between two variables, then

• A) as one variable increases, the other decreases.
• B) as one variable increases, so does the other.
• C) the two variables are close substitutes for each other.
• D) both variables increase over time.

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Definitions:

Marginal Rate

A rate that indicates the change in a variable (such as cost, revenue, or tax) as its underlying factor changes incrementally.

Substitution

The action of replacing one good or service with another based on changes in relative prices, incomes, or preferences.

Indifference Curve

A graph showing different combinations of two goods that provide the same level of utility or satisfaction to a consumer.

Utility

In economics, a measure of satisfaction, usefulness or value that an individual gains from consuming goods and services.