Suppose that Cathy spends all of her income on 20 units of good X and 25 units of good Y. Cathy's marginal utility from the 20th unit of good X is 9 utils, and her marginal utility from the 25th unit of good Y is 19 utils. If the price of good X is $0.50 per unit and the price of good Y is $1.00 per unit, then to comply with the rational spending rule, Cathy should:
A. purchase more than 20 units of good X and more than 25 units of good Y.
B. purchase more than 20 units of good X and less than 25 units of Y.
C. continue to purchase 20 units of good X and 25 units of good Y.
D. purchase less than 20 units of good X and more than 25 units of good Y.
Answer: D
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A monopolistically competitive firm
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Refer to the above data. For the years shown, the growth of
A.
Real GDP exceeds the growth of nominal GDP
B.
Nominal GDP exactly reflects increases in real output
C.
Nominal GDP overstates increases in real output
D.
Nominal GDP understates increases in real output
A family's ability to buy goods and services depends largely on the family's
a. economic mobility. b. place in the economic life cycle. c. transitory income. d. permanent income.