Josh is going to spend all of his income. For the last unit of Good X consumed Josh gets 20 utils and for the last unit of Good Y consumed he gets 10 utils. The price of Good X is $4. The price of Good Y is $1. If Josh wants to maximize his utility he should
A. continue to purchase the same amount of Good X and Good Y.
B. increase the consumption of Good X and decrease the consumption of Good Y.
C. decrease the consumption of Good X and increase the consumption of Good Y.
D. decrease the consumption of Good X and decrease the consumption of Good Y.
Answer: C
You might also like to view...
Suppose the economy is operating below potential output. If policy makers try to avoid a budget deficit by raising taxes or reducing government spending, these actions would
A) make a recession worse. B) increase inflation. C) negate the multiplier effect. D) help pull an economy out of a depression.
In a modern dynamic economy such as the United States, full employment generally means
a. cyclical unemployment is present. b. everyone (excluding teenagers) that would like to work is employed. c. approximately 95 percent of the labor force is employed. d. 100 percent of the labor force is either working or seeking work.
Private decisions about consumption of common resources and production of public goods usually lead to an
a. efficient allocation of resources and external effects. b. efficient allocation of resources and no external effects. c. inefficient allocation of resources and external effects. d. inefficient allocation of resources and no external effects.
During the 1970's, U.S. inflation averaged 7% each year and real GDP increased. Holding velocity constant and using the quantity equation, we conclude that
a. money growth must have been greater than the growth of real income. b. money growth must have been less than the growth of real income. c. prices fell during the 1970's. d. output fell during the 1970's.