Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and MUy/Py = 4. To maximize utility, he should consume
A. the same amount of X and Y since he is already maximizing utility.
B. less X and more Y.
C. less of both X and Y.
D. more X and less Y.
Answer: D
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Which of the following is not included in taxable income?
a. wages b. salaries c. alimony received d. interest on municipal bonds
In the long run, a monopolistic competitor will
a. always produce at minimum efficient scale b. produce too little output to achieve minimum cost per unit c. use limit pricing to forestall competition d. earn economic profits e. standardize its product
If the price of a good falls by 10% and the percentage increase in the total amount consumers spend on the good is 5%, then the good is
A. elastic. B. inelastic. C. perfectly inelastic. D. unit elastic.
The aggregate demand curve is downward-sloping because, other things being equal,
A. People buy more goods and services at higher average prices. B. People buy fewer goods and services at lower average incomes. C. A higher average price level will induce producers to offer more output than otherwise. D. People buy more goods and services at lower average prices.