If There Are Two Goods, If a Consumer Prefers More

question 22

True/False

If there are two goods, if a consumer prefers more of each good to less, and if she has a diminishing marginal rate of substitution, then her preferences are convex.

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Definitions:

MPC

Marginal Propensity to Consume, which is the proportion of any additional income that is spent on consumption rather than being saved.

Savings

Money set aside typically in financial instruments, representing deferred consumption or for future use.

Disposable Income

The economic provision for households' saving and spending activities post income tax calculations.

Saving

Income that is not expended on immediate consumption but rather reserved for investing or future purposes.