Bob views apples and oranges as perfect substitutes in his consumption, and MRS = 1 for all combinations of the two goods in his indifference map
Suppose the price of apples is $2 per pound, the price of oranges is $3 per pound, and Bob's budget is $30 per week. What is Bob's utility maximizing choice between these two goods? A) 4 pounds of apples and 6 pounds of oranges
B) 5 pounds of apples and 5 pounds of oranges
C) 10 pounds of oranges and no apples
D) 15 pounds of apples and no oranges
E) none of the above
D
You might also like to view...
The Social Security system is a pure income transfer program, financed on a pay-as-you-go basis
Indicate whether the statement is true or false
A substantial increase in marginal tax rates will most likely encourage individuals to choose: a. to work more overtime
b. to invest more. c. to spend more of their scarce resources looking for tax shelters. d. none of the above.
In the BankInc case, the change in assignment for caseworkers was made practical by
A. computerization of task input for managerial oversight. B. centralized functional management systems. C. integrating credit checking with pricing, but maintaining document preparation in a separate department. D. elimination of cross-training among credit tasks.
When the Fed buys bonds
a. the supply of money increases and so aggregate demand shifts right. b. the supply of money decreases and so aggregate demand shifts left. c. the supply of money decreases and so aggregate demand shifts right. d. the supply of money increases and so aggregate demand shifts left.