Joaquin's marginal utility from an additional slice of pumpkin pie is 4 utils and his marginal utility from an additional slice of pecan pie is 6 utils. If a slice of pumpkin pie costs $2.50, and a slice of pecan pie costs $3.00, then Joaquin:
A. should reallocate his spending towards pecan pie and away from pumpkin pie.
B. should reallocate his spending towards pumpkin pie and away from pecan pie.
C. is maximizing his utility.
D. should spend more on pumpkin pie and more pecan pie.
Answer: A
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The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is
A) W. B) X. C) Y. D) Z.
Monetary policy has one clear advantage over fiscal policy by virtue of its very short
A) data lag. B) data and recognition lags. C) legislative and transmissions lags. D) effectiveness lag.
A merger between the Ford Motor Company and General Motors would be an example of a
A) vertical merger. B) horizontal merger. C) conglomerate merger. D) trust.
Refer to the diagram for a natural monopolist. If a regulatory commission set a maximum price of P 2 , the monopolist would:
A. produce output Q 1 and realize an economic profit.
B. produce output Q 3 and realize an economic profit.
C. close down in the short run.
D. produce output Q 3 and realize a normal profit.