The Rate at Which Someone Can Swap Money for a Good

question 29

Multiple Choice

The rate at which someone can swap money for a good is called the _____ of the good.

• A) Price
• B) Opportunity cost
• C) Total cost
• D) Rate of substitution

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Definitions:

Utility Function

An economic model that describes how consumers rank different bundles or combinations of goods according to the level of satisfaction or utility they provide.

Equivalent Variation

A measure in economics that captures the change in wealth needed to maintain utility at a pre-change level after a price change.

Income

Money that an individual or business receives in exchange for providing labor, producing goods, or investing capital, over a certain period.

Utility Function

A mathematical representation that translates the satisfaction or happiness a consumer gains from consuming quantities of goods and services into a numerical value.