For any two goods, A and B, if MUA divided by PA equals 2.5 and MUB divided by PB equals 4.0, then with given income and prices the consumer should
A) buy more of good A and less of good B.
B) buy more of good B and less of good A.
C) buy all of good B and no A.
D) stop because an equilibrium is achieved.
Answer: B
You might also like to view...
Which of the following is not a result of government price controls?
A) Some people win and some people lose. B) A deadweight loss will occur. C) Price controls benefit poor consumers but harm producers and wealthy consumers. D) Price controls decrease economic efficiency.
If, in the coordination failure model, the nominal money supply acts as a sunspot variable, then it is likely that the nominal money supply would
A) be procyclical. B) be acyclical. C) be countercyclical. D) alternatively appear to be procyclical and countercyclical.
The substitution effect of a change in the real interest rate is an example of
A) an intratemporal substitution effect. B) an intertemporal substitution effect. C) an atemporal substitution effect. D) a temporary substitution effect.
Monopoly firms may lead to higher costs than perfectly competitive firms.
Answer the following statement true (T) or false (F)