Asked by Sierra Summers on Jun 09, 2024
Verified
Goods that are considered "bads" have this characteristic:
A) their marginal rates of substitution are constant.
B) for those goods, less is preferred to more.
C) preferences for those goods are not complete.
D) those goods have horizontal or vertical indifference curves.
Marginal Rates of Substitution
The speed at which a buyer is prepared to sacrifice one item for another while keeping their satisfaction constant.
Bads
Are items that people do not desire to have, opposite to goods, which have a negative impact on utility when consumed.
Indifference Curves
Graphical representations in microeconomics showing different bundles of goods between which a consumer is indifferent.
- Acquire an understanding of the principles surrounding perfect substitutes and perfect complements in the context of consumer choices.
Verified Answer
EV
Emily VargasJun 15, 2024
Final Answer :
B
Explanation :
Goods that are considered "bads" are those for which less is preferred to more. This means that as the quantity of the good increases, the consumer's satisfaction decreases. Examples of bads include pollution, traffic congestion, and garbage. Therefore, option B is the correct choice. Option A (their marginal rates of substitution are constant) is incorrect because this is a characteristic of goods that are perfect substitutes or perfect complements, not bads. Option C (preferences for those goods are not complete) is incorrect because completeness of preferences is a property of all goods and not just bads. Option D (those goods have horizontal or vertical indifference curves) is incorrect because this is a property of perfect substitutes and perfect complements, not bads.
Learning Objectives
- Acquire an understanding of the principles surrounding perfect substitutes and perfect complements in the context of consumer choices.