We Assume That the Representative Consumer's Preferences Exhibit the Properties

question 56

Multiple Choice

We assume that the representative consumer's preferences exhibit the properties that

• A) they be convex and that more is always preferred to less.
• B) more is always preferred to less and that each consumer has one strictly favorite good.
• C) each consumer has one strictly preferred good and that consumption and leisure are both normal goods.
• D) that consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle.
• E) more is always preferred to less and that consumers do not like diversity in his or her consumption bundle.

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Definitions:

Budget Line

A depicted representation of all conceivable combinations of two commodities buyable with a certain amount of money at steady prices.

Price Of Good X

The amount of money required to purchase a specific quantity of Good X, reflecting its market value at a given time.

Price Of Good Y

The amount of money required to purchase a unit of good Y in the market.

Budget Line

An illustrative chart of all the possible pairs of two items that can be bought within a certain budget at fixed prices.