The indifference curve and the cause of downward slope.

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Chapter 6.A, Problem 11SQ

To determine

The indifference curve and the cause of downward slope.

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i. It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? ii. Assuming that seafood is your favorite food. Would the law of diminishing marginal utility apply to your consumption of seafood? iii. Using examples, does an increase in income affect a consumer’s budget line? Does it impact their total utility.

Mr. Max is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Mr. Max has only $20 to spend. If the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 12, then: a. he should not buy anything. b. he should buy more of A and less of B. c. he should buy less of A and more of B. d. he should buy A and B in the quantities indicated. e. he should buy more of A and little more than that of B.

According to the law of diminishing marginal utility, what happens as a consumer consumes more units of a good? A. Total utility increases at a decreasing rate.B. Marginal utility increases at a decreasing rate.C. Total utility decreases at an increasing rate.D. Marginal utility decreases at an increasing rate.