Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. At his new consumer equilibrium Joshua would consume
A) more apples and less bread.
B) fewer apples and more bread.
C) some combination of apples and bread corresponding to a lower ratio of the marginal utility of bread to the marginal utility of apples.
D) the same quantity of apples and the same quantity of bread.
B
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A consumer has maximized her total utility (as measured in money) when, at the quantity of each good chosen
A. marginal utility is negative. B. marginal utility divided by price is equal to 1. C. marginal utility is greater than price. D. marginal utility is equal to total utility.
The above figure shows the utility of wealth curve for a homeowner whose only possession is a $50,000 house
If there is a 20 percent chance that the home could be entirely destroyed, would this person buy a $20,000 insurance policy to replace the house if destroyed? A) No, it is too expensive. B) No, he is not risk averse. C) Yes, the homeowner would pay even more. D) Yes, this is the most the homeowner would pay.
A successful market economy requires
A) an equitable distribution of income and limits on immigration. B) generous unemployment benefits and paid medical leave for everyone in the labor force. C) a government-controlled banking system and government price controls. D) well-defined property rights and an independent court system to adjudicate disputes based on the law.
Which of the following is included in GDP, but may not have been economically beneficial?
a. Building schools b. Water treatment plant construction c. Residential alarm installations d. Airport construction