Figure 5-1 Shows the Preferences of a Consumer for Food

question 85

Multiple Choice

Figure 5-1 shows the preferences of a consumer for food and other goods.He is initially in equilibrium at point A where the budget line MN is tangent to the indifference curve.
Figure 5-1
-In Figure 5-1,the effect of substituting an equal-cost lump-sum grant for an excise subsidy is to _____.

• A)increase consumption of food by GJ
• B)decrease consumption of food by HJ
• C)keep food consumption unchanged
• D)decrease consumption of other goods by EK

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Definitions:

Courageous

Possessing or displaying bravery and willingness to face fear, danger, or difficulty.

Psychological Egoism

The theory that suggests that all human actions are motivated by self-interest, even when appearing to be altruistic.

Ethical Egoism

A moral philosophy arguing that individuals should act in their own self-interest and that this is the foundation of morality.

Ought

expresses duty, correctness, or advisability, typically concerning moral obligation or desirable actions.