Mary is maximizing utility by eating three pancakes and two eggs. The principle of rational choice says that if there is diminishing marginal utility and the price of eggs rises, Mary will choose to eat more pancakes and fewer eggs.
Answer the following statement true (T) or false (F)
True
Since the ratios of the marginal utilities to price were equal to begin with, a higher price for eggs makes the marginal utility per dollar of pancakes higher than that of eggs, and therefore Mary will eat more pancakes and fewer eggs.
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An economist who would most likely use active policy making would support which of the following conclusions?
A) Demand shocks have little or no short-run effects on real Gross Domestic Product (GDP) and unemployment. B) Pure competition is not typical in most markets. C) Price flexibility is common in most markets. D) Supply shocks explain most business cycles.
Harry and his wife are looking for a new house. However, they cannot decide where to buy the house. Harry wants to live in Santa Cruz, while his wife wants to live in Ontario
If Harry values living in Santa Cruz at $10,000 and his wife values living in Ontario at $15,000, in which place are they likely to buy a house?
Tax laws affect
A) economic efficiency but not equity. B) consumption and production, not efficiency and equity. C) both efficiency and equity. D) equity but not economic efficiency.
If Best Dogs sells its hot dogs only in packages of eight, this is an example of ________.
A) an all-or-nothing offer B) linear pricing C) two-part pricing D) commodity bundling