Carla is spending all her income on only two goods: apples and bananas. The price of an apple is $2 and the price of a banana is $1 . If Carla's marginal utility of an apple is 4 and her marginal utility of a banana is 3, she should consume:
a. more apples and fewer bananas to maximize total utility.
b. more bananas and fewer apples to maximize total utility.
c. more apples and more bananas to maximize total utility.
d. fewer apples and fewer bananas to maximize total utility.
e. her current amounts of apples and bananas to maximize total utility.
b
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According the traditional Keynesian approach, an increase in government spending is effective in raising real Gross Domestic Product (GDP) if
A) the price level is fixed. B) the price level is flexible. C) the price level does not exist. D) Ricardian equivalence occurs, regardless of the price level.
The amount of required reserves a bank holds depends on the
A) required reserve ratio. B) demand-deposit ratio. C) excess-reserve ratio. D) currency ratio.
Figure 5-3
illustrates the market for a product that generates an external benefit. D1 is the private market demand curve, while D2 is the demand curve including the external benefit. Which of the following is true?
a.
Point a illustrates the competitive private market outcome, while point b illustrates the outcome consistent with economic efficiency.
b.
Point b illustrates the competitive private market outcome, while point a illustrates the outcome consistent with economic efficiency.
c.
The competitive private market outcome is consistent with the conditions for economic efficiency.
d.
The good will tend to be oversupplied relative to the conditions for economic efficiency.
The dollar has depreciated if it buys less of a foreign currency.
a. True
b. False
Indicate whether the statement is true or false