After getting an A on your economics exam, you decide to go to your favorite Mexican restaurant to celebrate. You are having trouble deciding whether to order the chipotle chicken chimichanga or the cilantro seafood enchiladas. Use the rule of equal
marginal utility per dollar to determine which one to purchase: (a) the chimichanga for $8 which gives you 120 units of utility, or (b) the enchiladas for $15 which gives you 195 units of utility? Assume your budget is large enough to purchase either item.
What will be an ideal response?
You should buy the chimichanga because the MU per dollar is 15 while MU per dollar for the enchiladas is only 13.
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In the linear probability model, the interpretation of the slope coefficient is
A) the change in odds associated with a unit change in X, holding other regressors constant. B) not all that meaningful since the dependent variable is either 0 or 1. C) the change in probability that Y=1 associated with a unit change in X, holding others regressors constant. D) the response in the dependent variable to a percentage change in the regressor.
Public schools, parks, libraries, and roads are paid for largely through tax revenue because
a. society finds them so valuable that citizens are happy to pay for their full cost. b. these goods create a free-rider problem. c. if they were funded privately, too many of these goods would be produced. d. All of the above are correct.
The average tax rate measures the
a. fraction of spending paid in taxes. b. fraction of income paid in taxes. c. incremental rate of tax on income. d. average deadweight loss from all taxes.