If the marginal value of 1 bottle of shampoo is 4 soap bars, then
a. the absolute price of shampoo is 4 times the absolute price of a soap bar.
b. trading away 1 bottle of shampoo for 4 bars of soap will not affect the consumer's level of satisfaction.
c. the consumer's optimum contains 4 times as many bars of soap as bottles of shampoo.
d. shampoo provides 4 times as much satisfaction to the consumer as does soap.
b. trading away 1 bottle of shampoo for 4 bars of soap will not affect the consumer's level of satisfaction.
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Social Security payments are examples of
A) transfer payments. B) nondurable goods. C) durable goods. D) services.
Marylou, whose utility of wealth curve is shown in the figure above, faces two options. Option A yields $200 for sure. Option B has a 0.3 probability of yielding $100, and a 0.7 probability of yielding $300. Marylou, who is
A) picks option A. B) picks option B. C) is indifferent between option A and option B. D) needs more information to make a choice.
In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects B) the income effect outweighs the substitution effect C) the income and substitution effects cancel out with one another D) the income effect increases the severity of the substitution effect
Explain the impact of the multiplier effect through the business cycle.
What will be an ideal response?