Which statement is true within the framework of rational choice economics? A. Wh
ID: 1093385 • Letter: W
Question
Which statement is true within the framework of rational choice economics?
A. When the relative prices change a rational consumer's preference
pattern will be altered.
B. The budget line and the indifference curves are interdependent in the
maximizing models.
C. Indifference curves are empirically determined functions that are
identical for all persons who are truly rational choice operators.
D. When the relative prices change a rational consumer's preference will
not be altered.
Say a consumer always consumed peanut butter and jelly in fixed proportions
(for a perfect peanut and jelly sandwich). Then the indifference curves for
peanut butter and jelly for this consumer would be:
A. L-shaped.
B. A straight line with positive slope.
C. A straight line with negative slope.
D. Convex.
Explanation / Answer
B. Tradeoff rate between the two goods under consideration at any particular point.
explanation
In economics, the marginal rate of substitution is the rate at which a consumer is ready to give up one good in exchange for another good while maintaining the same level of utility. At consumption levels, our marginal rates of substitution are identical.
question 2
The budget line and the indifference curves are interdependent in the
maximizing models
explanation- we usually see their boths intersection to find the optimum choice bundle of the consumer.
question 3
Say a consumer always consumed peanut butter and jelly in fixed proportions
(for a perfect peanut and jelly sandwich). Then the indifference curves for
peanut butter and jelly for this consumer would be:
L-shaped.
explanation
2 commomdities are being consumed together in a fixed proportion, hence they are acting like complements, and if theses preferences will be plotted they will give an L- shapped indifference curve.
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