Why Do Convex Indifference Curves Have a Negative Slope

question 184

Multiple Choice

Why do convex indifference curves have a negative slope?

• A) because consumers take market prices as given
• B) because consumers face a budget constraint
• C) because to keep utility constant, a consumer must get more of one good if she is to give up some of the other
• D) because scarcity implies that it is not possible to consume more of one good without giving up some of the other

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Definitions:

Mature Production Process

Indicates a manufacturing or production process that has reached a stage of optimization and efficiency through experience and adaptation.

Standard Costing System

An accounting system that assigns fixed costs to products based on standard assumptions about the production process.

Variance Accounts

Accounts used in managerial accounting to record the differences between actual costs and standard (budgeted) costs.

Direct Material Price Variance

The difference between the actual cost of direct materials and the standard cost multiplied by the actual quantity used.