Shelly purchases a leather purse for $400. One can infer that:
A. her reservation price was less than $400.
B. she paid too much.
C. her reservation price was at least $400.
D. her reservation price was exactly $400.
Answer: C
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Assume that Virgil purchases a combination of products Y and Z such that, after he is done spending his entire budget, MUy / Py = 25 and MUz / Pz = 25. Based on the equal marginal principle, Virgil
A. should have purchased more Y and more Z. B. should have purchased less Y and more Z. C. is maximizing his total utility. D. should have purchased more Y and less Z.
If the slope of the aggregate expenditure curve is 0.5, then the expenditure multiplier equals
A) 5. B) 0.5. C) 2. D) 3. E) 4.
Assuming that, over a given period, the value of transactions in current dollars is $8 trillion and the money stock is $500 billion. What is the transaction velocity of money?
a. .0625 b. 12 c. 16 d. None of the above
Someone who is risk-preferring has
A) diminishing marginal utility of wealth. B) constant marginal utility of wealth. C) increasing marginal utility of wealth. D) less marginal utility of wealth than someone who is risk-preferring.