Taylor spends all of her income on tank tops and running shoes, and the price of a pair of running shoes is four times the price of a tank top. In order to maximize total utility, Taylor should buy
a. four times as many tank tops as pairs of running shoes.
b. four times as many pairs of running shoes as tank tops.
c. both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top.
d. both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes.
c
You might also like to view...
All homothetic goods are normal goods.
Answer the following statement true (T) or false (F)
Which of the following statements is true of perfect competition?
A) The outcome in a perfectly competitive market is Pareto inefficient. B) The total value of production across a perfectly competitive industry is maximized. C) Firms under perfect competition produce at a point where price is greater than marginal cost. D) Consumers in a competitive market purchase at a point where marginal utility is greater than price.
One reason that international trade is restricted is that
A) the individual gain to parties who benefit from the protection is much larger than the individual loss to parties who lose. B) the government completely pays the losers from international trade for their losses. C) protectionism benefits consumers. D) the government cannot measure the cost of protectionism.
The major incentive for cost minimization is the
a. power of shareholders in the company. b. fear of top management by workers. c. discipline imposed by the market system. d. impact on U.S. corporations of taxing by the government.