When the Marginal Rates of Substitution for Two Consumers Differ

question 29

Multiple Choice

When the marginal rates of substitution for two consumers differ:

• A)the indifference curves of the consumers are tangent.
• B)mutually beneficial trade cannot take place.
• C)consumers' bargaining skills will determine their position on the contract curve.
• D)trade will benefit one of the consumers and harm the other consumer.

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Definitions:

Fixed Assets

Long-term tangible assets that a company uses in its operations and that are not intended to be sold in the regular course of business.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, typically noted on the income statement as a non-operating expense.

Depreciation

A method used in accounting to divide the expenditure of a tangible asset over the time it is useful.

Taxes Paid

The total amount of taxes remitted to the government by an individual or organization, including income, sales, and property taxes.