Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer decides to buy 4
apples, how many bananas can she also buy with the remainder of her budget?
A. 8 bananas
B. 4 bananas
C. 6 bananas
D. 10 bananas
Answer: A
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A major tax revision occurred in the 1980s. Between 1981 and 1986, the top marginal tax rate for the federal personal income tax
a. decreased from 70 percent to 20 percent b. increased from 50 percent to 75 percent c. decreased from 70 percent to 31 percent d. increased from 31 percent to 50 percent e. decreased from 50 percent to 15 percent
The poverty rate _______ between 1993 and 2000 and _____ between 2001 and 2004.
A. fell; fell B. rose; rose C. fell; rose D. rose; fell
Which of the following would both make a country's real exchange rate rise?
a. its budget deficit increases and bonds issued in the country become riskier b. bonds issued in that country become riskier and it imposes an import quota c. it imposes an import quota and the budget deficit increases d. None of the above are correct.
Answer the following questions true (T) or false (F)
1. The income effect of a price increase for a Giffen good outweighs the substitution effect. 2. The demand curve for an inferior good can never be downward sloping. 3. The demand curve for a luxury good is upward sloping.