Josh has just eaten another cookie and his total utility increased. This means that Josh's marginal utility for this additional cookie is
A) positive.
B) negative.
C) zero.
D) not determinable without more information.
Answer: A
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If the natural unemployment rate is 4 percent and potential GDP is $30 billion, then according to Okun's Law, when the unemployment rate falls to 3 percent, real GDP
A) decreases to $29.4 billion. B) first decreases by 4 percent and then increases by 4 percent. C) increases to $60 billion. D) increases to $30.6 billion. E) remains constant at $30 billion.
Assume a consumer is currently purchasing a combination of goods, X and Y, that maximizes her utility given her budget constraint, i.e., MRSX,Y = PX/PY. Now assume that there is a decrease in the price of Y
In this case, to once again maximize her utility, the consumer will want to adjust her purchases of X and Y such that: A) the marginal rate of substitution of X for Y, i.e., MRSX,Y, decreases. B) the marginal rate of substitution of X for Y, i.e., MRSX,Y, stays the same. C) the marginal rate of substitution of X for Y, i.e., MRSX,Y, increases. D) none of the above. The consumer will continue to maximize her utility after the price change by continuing to consume the same combination of X and Y.
If all actions are known to all then there is
A) a focused economy. B) a negative externality. C) transparency. D) a dictatorship.
Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?
a. Without the farm subsidies, food shortages would result. b. Subsidies promote the efficient use of agricultural resources. c. Agricultural interests seek a redistribution of income favoring themselves. d. The price support programs reduce food costs, which helps the poor.