The Convex Shape of a Standard Indifference Curve Reflects

question 4

Multiple Choice

The convex shape of a standard indifference curve reflects:

• A)a diminishing marginal rate of substitution of leisure for income
• B)an increasing marginal rate of substitution of leisure for income
• C)a constant marginal rate of substitution of leisure for income
• D)the wage rate

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Definitions:

Purchasing Per Unit

The cost associated with buying an individual unit of product or material.

Relevant Costs

Costs that should be considered when making business decisions because they are future costs that differ between alternatives.

Fixed Overhead

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Released Facilities

Properties, equipment, or facilities that are no longer under contract or reserved, and are available for use or lease.