A consumer is maximizing her utility with a particular money income when:
A. the total utility derived from each product consumed is the same.
B. MU a /P a = MU b /P b = MU c /P c = . . . = MU n /P n .
C. MU a = MU b = MU c = . . . = MU n .
D. P a = P b = P c = . . . = P
Answer: B
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A) first-come, first-served B) sharing equally C) contest D) personal characteristics E) command
Refer to the above figure. Suppose the marginal benefit and the marginal cost curves of pollution abatement are normally shaped. Technological change that made it easier to produce in a "cleaner" fashion would cause
A) curve (4 ) to shift out, increasing the optimal amount of pollution abatement. B) curve (3 ) to shift up, raising the marginal benefits and costs and reducing the amount of pollution abatement. C) curve (2 ) to shift out, increasing the optimal amount of pollution abatement. D) curve (1 ) to shift out, increasing the optimal amount of pollution abatement.
When demand is inelastic and price decreases:
A) the effect of the decrease in price on total revenue dominates the effect of the increase in quantity demanded on total revenue; overall total revenue declines. B) the effect of the increase in quantity demanded on total revenue dominates the effect of the decrease in price on total revenue; overall total revenue increases. C) the effects of the decrease in price on total revenue and the corresponding increase in quantity demanded on total revenue perfectly offset one another; overall total revenue remains unchanged. D) quantity demanded and total revenue fall to zero.
If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year, this would indicate that
a. the inflation rate during 2011 was 30 percent. b. the general level of prices during 2011 was 30 percent higher than during 2005. c. the inflation rate during 2011 was 130 percent. d. nominal GDP grew by 30 percent during 2011. e. real GDP was 30 percent higher in 2011 than 2005.