Asked by Andrew Shoffler on May 18, 2024
Verified
Toby Talkalot subscribes to a local phone service that charges a fixed fee of $10 per month and allows him to place as many local phone calls as he likes without further charge.Let good 1 be an aggregate of commodities other than local phone use and let good 2 be local phone use.(Measure good 1 on the horizontal axis and good 2 on the vertical axis.) On Monday, Toby didn't use the telephone at all.The slope m of his indifference curve at the consumption bundle he chose on Monday was
A) positive.
B) less than or equal to 0.
C) 0.
D) greater than or equal to 0.
E) negative.
Indifference Curve
A graph showing different combinations of two goods that give a consumer equal satisfaction and utility, highlighting their preferences.
Fixed Fee
A set amount charged for a service or product, unrelated to usage or quantity.
Local Phone Service
A telecommunications service that connects calls within a specific geographic area, typically within a single city or region.
- Decode the implications of the marginal rate of substitution and its differential behavior along the continuum of indifference curves.
- Learn how indifference curve analysis elucidates the rationale behind consumer selections of goods bundles.
Verified Answer
Learning Objectives
- Decode the implications of the marginal rate of substitution and its differential behavior along the continuum of indifference curves.
- Learn how indifference curve analysis elucidates the rationale behind consumer selections of goods bundles.
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