Betty is maximizing her satisfaction from spending her budget on two items: movie rentals and music downloads. If the marginal utility she receives from the last movie rental is twice that from the last music download, what is the price of a movie rental if the price of a music download is $0.80?
A. $0.40
B. $1.60
C. $0.80
D. $1.20
Answer: B
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Starting from a pure exchange equilibrium, an increase in the demand for a commodity will result in:
a. a fall in the market price. b. a rise in the market price. c. a rise in the equilibrium output. d. a fall in the equilibrium output.
Which of the following products has the most elastic demand?
A. Raspberry Mocha Kona coffee blend at Starbuck's B. Starbuck's coffee C. coffee D. all beverages
If the price of a 32GB memory card decreases from $25 to $20, the percentage change is:
A. -20 percent. B. -33 percent. C. -50 percent. D. -60 percent.
Refer to the graph below. Which of the following factors does not explain a movement along the AD curve?
A. The expenditure multiplier effect
B. The real-balances effect
C. The interest-rate effect
D. The foreign purchases effect