Question

The determines the for a customer who is to make a consumption decision for two goods, knowing the prices of the goods and how much s/he can afford. 1. The set of personal preferences; affordable budget 2. Utility level; opportunity set 3. Budget constraint; opportunity set 4. Opportunity set; sunk costs If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause equilibrium price to: 1. Rise and the equilibrium quantity to fall. 2. Rise and the equilibrium quantity to stay the same. 3. Rise and the equilibrium quantity to rise. 4. Stay the same and the equilibrium quantity to fall. H. The term is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit. 1. Diminishing marginal utility. 2. Marginal utility pattern. 3. Marginal income utility. 4. Increasing marginal utility.

Answer 1

a) Its the utility of the good that determines the opportunity set for a customers who is making a consumption decision for two goods knowing the price of the goods. The answer is "B".

b) "B'

This will increase the price of the goods and the equilibrium quantity in the market will remain the same. as the demand curve is perfectly inelastic.

c) "A'

Diminishing marginal utility describes that the marginal utility that we receive after consuming goods fall as we go on consuming more.