If a Consumer Chooses a Combination of Goods That Are

question 368

Multiple Choice

If a consumer chooses a combination of goods that are inside of her budget line, than

• A) the consumer is maximizing her satisfaction.
• B) the consumer is spending more than her current income.
• C) the consumer has a constant marginal rate of substitution for the two goods.
• D) the consumer is not maximizing her satisfaction.

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Definitions:

Lottery Tickets

Pieces of paper or digital receipts purchased in hopes of winning a large sum of money through a process of random selection.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of one good that can be produced for every possible quantity of another good produced, given available resources and technology.

Decreasing Opportunity Costs

A situation in which the opportunity costs of resources decrease as more of a good is produced.

Increasing Opportunity Costs

A situation where increasing production of one good requires larger and larger sacrifices in the production of another good due to limited resources.