Budget Curves
Classified in Economy
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A consumer cannot be indifferent about two combinations that yield disparate levels of utility. Therefore, an indifference curve cannot be
d. | thick. |
140. Each point along an indifference curve indicates a combination at which a consumer does not have a preference. Two divergent indifference curves can produce at least two points where there are distinct preferences. Therefore, indifference curves CANNOT
e. | intersect one another. |
141. Perfect substitutes produce an indifference curve with a(n) ________ marginal rate of substitution.
d. | constant |
142. ________ exist(s) when a consumer is completely indifferent between two goods.
b. | Perfect substitutes |
143. ________ exist(s) when a consumer is interested in consuming two goods in fixed proportions.
c. | Perfect complements |
144. A typical indifference curve that reflects the trade-off between two goods that are not ________ or ________ has a marginal rate of substitution that falls between these two extremes.
b. | perfect substitutes; perfect complements |
145. The slope of the indifference curve for perfect substitutes
c. | is always negative. |
146. The maximization point is the location at which an indifference curve and the budget constraint line
c. | are tangent to one another. |
147. A change in price results in a(n) ________ of the budget constraint line.
a. | rotation |
Graphing only a change in price for a good does not distinguish the contribution of the ________ from the ________.
a. | substitution effect; real-income effect |
149. For a low-priced good, the ________ is generally negligible and the substitution effect tends to ________.
d. | real-income effect; dominate |
150. A new ________ that is parallel to the first one, but just tangent to the new indifference curve, will reveal the real-income effect.
d. | budget constraint line |
139.