Mrs. Green is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the marginal utility of the last bag is 30 utils. The prices of soda and pretzels are $.60 per bottle and $.40 per bag respectively. It can be concluded that:
A) the two commodities are substitute goods.
B) Mrs. Green should spend more on pretzels and less on soda.
C) Mrs. Green should spend more on soda and less on pretzels.
D) Mrs. Green is buying soda and pretzels in the utility-maximizing amounts.
Answer: C) Mrs. Green should spend more on soda and less on pretzels.
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A budget constraint represents the:
A) inequality in the incomes earned by various economic agents. B) aggregate income earned by all the firms in an economy. C) total money income that an agent earns in different time periods. D) goods and services an economic agent can choose given her limited income.
Between 1870 and 1920, the total labor force increased by threefold while
(a) the total number of people employed in agriculture increased by almost twofold and the total number of people employed in manufacturing and other non- agriculture increased fivefold. (b) the total number of people employed in agriculture increased by almost fivefold and the total number of people employed in manufacturing and other non- agriculture increased by threefold. (c) the total number of people employed in agriculture increased and the total number of people employed in manufacturing and other non- agriculture increased by threefold. (d) the total number of people employed in manufacturing and other non- agriculture increased fivefold while agriculture decreased by twofold.
In the long run, a perfectly competitive firm earns no accounting profits
a. True b. False Indicate whether the statement is true or false
Refer to the following graph. The price of capital (r) is $20. 
What is the lowest possible cost at which 14,000 units of output can be produced?
A. $8,600 B. $4,200 C. $3,600 D. $2,400 E. none of the above