Suppose that Arnold spends all his income on bratwursts and piano lessons and his marginal utility per dollar on bratwursts is lower than that on piano lessons. Is Arnold maximizing his utility? Why or why not?
What will be an ideal response?
No. If Arnold spends a dollar less on bratwursts and a dollar more on piano lessons, his utility gain from more piano lessons will be greater than his utility loss from the decreased consumption of bratwursts and so his total utility will increase.
You might also like to view...
If it is difficult for a firm to attribute the output it produces to a particular worker then
A) a piece-rate system of compensation will be preferable to a salary system. B) a salary compensation system will be preferable to a commission system. C) its employees are likely to form a union. D) a commission system of compensation will be preferable to a salary system.
[NeedAttention]
Exhibit 30-2
?
The most distinguishing economic feature of money is its
A) medium of exchange role. B) store of value role. C) unit of account role. D) standard of deferred payment role.
Market-oriented economists favor the use of _____ to solve the global warming problem
a. explicit emission targets b. taxes on emissions c. tradable rights d. Both (a) and (b) e. Both (b) and (c)