Sanjay is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and MUy/Py = 14. 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: B
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Under which of the following circumstances would private saving be positive in a closed economy?
A) Y = $6 trillion C = $2 trillion TR = $8 trillion G = $3 trillion public saving = $1 trillion B) Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion public saving = $1 trillion C) Y = $8 trillion C = $2 trillion TR = $4 trillion G = $2 trillion public saving = $4 trillion D) Y = $9 trillion C = $5 trillion TR = $1 trillion G = $1 trillion public saving = $3 trillion
A consumer prefers market basket A to market basket B, and prefers market basket B to market basket C. Therefore, A is preferred to C. The assumption that leads to this conclusion is:
A) transitivity. B) completeness. C) all goods are good. D) diminishing MRS. E) assumption of rationality.
Suppose that the cross price elasticity of demand between good X and good Y is -1.55. This indicates that the two goods are
A) substitutes. B) complements. C) both inferior. D) completely unrelated in the minds of consumers.
A country's balance of payments summarizes all economic transactions during a given period between residents of that country and residents of other countries
a. True b. False