Geneva is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 36. Geneva's utility is only maximized if
A. the price of good X is twice that of good Y.
B. the price of good Y is twice that of good X.
C. the prices of X and Y are the same.
D. We cannot determine whether Geneva is maximizing her utility.
Answer: C
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Some grocery stores are now offering customers coupons which entitle them to a discount on certain items on their next visit when they go through the check-out line. This practice is an example of:
A) intertemporal price discrimination. B) third-degree price discrimination. C) a two-part tariff. D) bundling. E) none of the above
If government legislates a price floor that is below the equilibrium price
A. a shortage will develop. B. a black market will soon develop. C. a surplus will develop. D. market price and quantity sold will be unaffected.
Which of the following is the primary cause of inflation?
a. an increase in the quantity of money b. an increase in government spending c. an increase in unemployment d. an increase in productivity
The reserve requirement is the tool used least frequently by the Fed because it can cause abrupt changes in the money supply.
a. true b. false