Welcome Back. Continue with Google. Continue with Facebook. Forgot Password? New User? Sign Up. Create your account now. Signup with Email. Gender Male Female. Consider the following statements about demand curves, normal and inferior goods, and substitution, income, and gross effects. Evaluate whether each statement is true or false, explaining why you reach this conclusion.
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Request OTP. Share This Video Whatsapp. Text Solution. Skip to content Topic 6: Consumer Theory. Learning Objectives By the end of this section, you will be able to:. Understand the indifference curve Explain the marginal rate of substitution Represent perfect substitutes, perfect complements, and convex preferences on an indifference curve. Glossary Diminishing Marginal Rate of Substitution The more of a good one consumes, the less desirable it becomes.
Represented by MRS falling as x increases on an indifference curve. Indifference Curve a graph representing all consumption opportunities that a consumer holds as equal value Marginal Rate of Substitution the rate at which a consumer is willing to give up one good for another without a change in utility; the slope of the indifference curve Strictly Convex Preferences a good becomes less desirable as you acquire more of it, preference for a variety of goods Utility economic term referring to the total satisfaction received from consuming a good or service.
Exercises 6. If a consumer who buys two goods has strictly convex preferences, then: a Her indifference curves are relatively steep at low levels of x and relatively flat at high levels of x. Previous: 6. Next: 6. Share This Book Share on Twitter.
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