The Consumption Bundle That Maximizes Utility for a Consumer Is

question 27

Multiple Choice

The consumption bundle that maximizes utility for a consumer is the bundle that:

• A) equates the slope of the budget constraint with the slope of the indifference curve.
• B) maximizes marginal utility across all goods.
• C) minimizes the costs of production.
• D) maximizes the marginal rate of substitution.

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Definitions:

Long Run

A period in economic analysis where all factors of production and costs are variable, allowing for full adjustment to changes in the market or economy.

Short Run

A period in economic theory during which at least one factor of production is fixed, limiting the capacity to adjust to changes in market demand.

Elastic

Describes a situation where the quantity demanded or supplied of a good is sensitive to changes in price.

Short Run

A period in economics during which the quantity of at least one input (such as plant size) is fixed and cannot be changed.