Explain whether each of the following statements is true or false. The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is O A. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve. O B. OC. Px true because the MRS equals which increases as an individual moves downward along the demand curve. Py¹ Px true because the MRS equals which decreases as an individual moves downward along the demand curve. O D. false because the MRS is constant as an individual moves downward along an indifference curve. O E. false because the MRS diminishes as an individual moves upward along the demand curve. The level of utility increases as an individual moves downward along the demand curve. This statement is O A. true because price decreases pivot the budget line outward. O B. false because demand curves for inferior goods are upward sloping. C. false because the level of utility is constant along the demand curve. O D. true because price decreases shift the demand curve outward. O E. false because price increases pivot the budget line outward. Engel curves always slope upward. This statement is O A. true because Engel curves slope upward for normal goods. B. false because Engel curves slope downward for substitute goods. O C. false because Engel curves slope downward for normal goods. D. true because Engel curves slope upward for substitute and complementary goods. E. false because Engel curves slope downward for inferior goods.
Explain whether each of the following statements is true or false. The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis. This statement is O A. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve. O B. OC. Px true because the MRS equals which increases as an individual moves downward along the demand curve. Py¹ Px true because the MRS equals which decreases as an individual moves downward along the demand curve. O D. false because the MRS is constant as an individual moves downward along an indifference curve. O E. false because the MRS diminishes as an individual moves upward along the demand curve. The level of utility increases as an individual moves downward along the demand curve. This statement is O A. true because price decreases pivot the budget line outward. O B. false because demand curves for inferior goods are upward sloping. C. false because the level of utility is constant along the demand curve. O D. true because price decreases shift the demand curve outward. O E. false because price increases pivot the budget line outward. Engel curves always slope upward. This statement is O A. true because Engel curves slope upward for normal goods. B. false because Engel curves slope downward for substitute goods. O C. false because Engel curves slope downward for normal goods. D. true because Engel curves slope upward for substitute and complementary goods. E. false because Engel curves slope downward for inferior goods.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Explain whether each of the following statements is true or false.
The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve.
Assume the statement refers to good X with price Px, where good X is measured on the horizontal axis of an indifference map and
good Y is measured on the vertical axis. This statement is
O A. true because the MRS equals Px, which decreases as an individual moves downward along the demand curve.
B.
Px
which increases as an individual moves downward along the demand curve.
1
Py'
true because the MRS equals which decreases as an individual moves downward along the demand curve.
Py'
O C.
Px
D. false because the MRS is constant as an individual moves downward along an indifference curve.
O E. false because the MRS diminishes as an individual moves upward along the demand curve.
The level of utility increases as an individual moves downward along the demand curve. This statement is
true because the MRS equals
A. true because price decreases pivot the budget line outward.
B. false because demand curves for inferior goods are upward sloping.
C. false because the level of utility is constant along the demand curve.
D. true because price decreases shift the demand curve outward.
O E. false because price increases pivot the budget line outward.
Engel curves always slope upward. This statement is
O A. true because Engel curves slope upward for normal goods.
B. false because Engel curves slope downward for substitute goods.
OOO
C. false because Engel curves slope downward for normal goods.
D. true because Engel curves slope upward for substitute and complementary goods.
E. false because Engel curves slope downward for inferior goods.
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