Question

Please help with these questions

Question 16 0.8 pts The combinations that a consumer can afford line, and the area underneath, contain all of the possible indifference 0 redaction O Maginot O optimization O budget constraint Question 17 0.8 pts Since two goods are subject to diminishing marginal utility, the marginal rate of substitution is O always increasing O variant constant. the inverse slope of the indifference curve. O always decreasing. Question 18 0.8 pts Utility is a balance between and factors. O economic; personal capital; labor good; bad O transitive; intransitive O production; consumption

Answer 1

Answer

16. Budget constraint. The budget constraint is the combination of commodities that a person can afford using all of his income. Thus the area underneath budget constraint shows all the affordable combinations with certain savings.

17. Always decreasing. This is due to two reasons- First, wants are satiable and second, goods are not perfect substitutes.

18. Economic and Personal. Utility is a term which represents  the psychological satisfaction of consumer. It is economic term because it affects the demand and ultimately price.

19. Staples cost twice as much as boxes of paper clips. With the same income the purchaser can buy 5 units of staples or 10 units of paper clips.

20. Perfect complements. By definition, two goods are perfect complements if they are consumed in fixed proportion