Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12 . The price of clothes is $20 . What must be the price of food?
a. 12.
b. 6.
c. 4.
d. 1.
e. 0.
c
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The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
A) trade-off. B) equity. C) efficiency. D) optimization.
An increase in capital outflows from the United States will
A) decrease the balance on the capital account. B) decrease the balance on the financial account. C) increase the balance on the financial account. D) increase the balance on the current account.
Suppose a person has a discount rate of zero. This implies she
A) places no value on the future. B) places no value on the present. C) values the present and the future equally. D) would not lend money at any positive interest rate.
Which of the following companies would gain from foreign currency depreciation?
A. Companies that borrow in foreign currency. B. Companies that export goods and services. C. Companies that invest in the foreign equity markets. D. Companies that buy bonds issued by the foreign government.