You wish to buy only one CD. Use the rule of equal marginal utility per dollar to determine which one to purchase: (a) Drake's latest CD for $15 which gives you 75 units of utility, or (b) Bob Dylan's "Shadows in the Night" for $10 that gives you 100
units of utility?
What will be an ideal response?
You should buy the Bob Dylan CD because the MU per dollar is 10 while MU per dollar for the Drake CD is only 5.
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If a firm can increase its sales only by lowering its price, then
A) the firm is a price searcher. B) the firm's marginal revenue will be less than price. C) the demand curve for the firm's product is negatively sloped. D) all of the above are true.
For a normal good, does the income effect reinforce the substitution effect or does it partly offset the substitution effect?
What will be an ideal response?
Which of the following is an example of a public good?
a. telephone service b. national defense c. a city-owned bus d. electricity generated by a city-owned public utility
Three factors that cause interest rates among different financial instruments to vary are
A. default risk, expected inflation, and maturity. B. default risk, maturity, and taxability. C. default risk, expected inflation, and taxability. D. default risk, current inflation, and taxability.