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ECON 1000 Lecture Notes - Lecture 8: Indifference Curve, Real Income, Relative Price

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School
York University
Department
Economics
Course
ECON 1000
Professor
Sam Lanfranco

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ECON 1000 Full Course Notes
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Document Summary

Budget line describes the limits to the household"s consumption choices: budget equation: state that expenditure = income, relative price is the magnitude of the slope of the budget line. Rp is the price of one good divided by the price of another good. Chapter 9: real income is its income expressed as a quantity of goods that the household can afford to buy. 5: marginal rate of substitution (mrs): measures the rate at which a person is willing to give up good y to ger an. Indifferent curve steep, mrs high, the person is willing to give up a large quantity of y to get a bit more x. Has a marginal rate of substitution between the two goods equal to the rp of the two goods: firm an institution that hires factors of production and organizes those factors to produce and sell goods and.

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Related Questions

18. Which of the following statements is false? A) A consumer possesses a preference map. B) An indifference curve is a line that shows combinations of goods among which a consumer is indifferent. C) A consumer has only one indifference curve. D) The marginal rate of substitution is the rate at which a consumer will give up good y to get an additional unit of good x and remain on the same indifference curve. E) If the indifference curve is steep, the marginal rate of substitution is high.

19. Suppose good X is measured on the horizontal axis and good Y on the vertical axis. The marginal rate of substitution is best defined as the A) slope of the budget line. rate at which a person gives up good X to get more of good Y and remains indifferent. rate at which a person gives up good Y to get more of good X and remains indifferent. relative price of good Y in terms of good X relative price of good X in terms of good Y. D) E)

23) Good X is measured on the horizontal axis and good Y is measured on the vertical axis. The marginal rate of substitution is A) the relative price of good X in terms of good Y. B) the relative price of good Y in terms of good X. C) the rate at which a consumer will give up good Y to obtain an additional unit of good X while remaining indifferent. D) the rate at which a consumer will give up good X to obtain an additional unit of good Y while remaining indifferent. E) equal to the magnitude of the slope of the budget line.