20. Some individuals choose to undertake risky prospects while others choose saf
ID: 1194850 • Letter: 2
Question
20. Some individuals choose to undertake risky prospects while others choose safer ones, because they have different
A. Degrees of transitivity
B. Marginal rates of substitution between risk and reward
C. Income elasticities
D. Marginal utilities
21. Along the same indifference curve, MRS is
A. Constant as more of one good is obtained
B. Increasing as more of one good is obtained
C. Decreasing as more of one good is obtained
D. Varying irregularly as more of one good is obtained
22. The possibility of the endless cyclical preference is eliminated by the property of
A. Completeness
B. More and better
C. Diminishing marginal rate of substitution
D. Transitivity
23. At the equilibrium consumption bundle, which of the following holds?
A. MRSX,Y = PX /PY
B. MRSX,Y = -PX /PY
C. MRSX,Y = -PY /PX
D. MRSX,Y =PY /PX
24. If you include in your offerings some inferior goods, the demand for these products will increase
A. During bad economic times
B. During economic booms
C. When incomes are high
D. All of the statements associated with this question are correct
25. Consumers adjust their purchasing behavior so that:
A. They purchase as many scarce resources as possible
B. Marginal rate of substitution is maximized
C. Marginal rate of substitution is minimized
D. The ratio of prices they pay equals their marginal rate of substitution
Explanation / Answer
Some individuals choose to undertake risky prospects while others choose safer ones, because they have different Marginal rates of substitution between risk and reward
Along the same indifference curve, MRS is Decreasing as more of one good is obtained
The possibility of the endless cyclical preference is eliminated by the property of transitivity
At the equilibrium consumption bundle MRSX,Y =PY /PX
If you include in your offerings some inferior goods, the demand for these products will increase During bad economic times
Consumers adjust their purchasing behavior so that The ratio of prices they pay equals their marginal rate of substitution
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