Refer to Goods X and Y. Suppose the consumer is at an optimum, spending all his income on good X. How are the marginal value of X and the relative price of X related at this corner solution?
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.
a. The marginal value of X and the relative price of X must be equal.
b. The marginal value of X must be less than or equal to the relative price of X.
c. The marginal value of X must be greater than or equal to the relative price of X.
d. There is no definite relationship between the marginal value and the relative price of X.
c. The marginal value of X must be greater than or equal to the relative price of X.
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In the ________ increases in the supply of money will ________
A) long run; lead to lower prices B) short run; raise total demand and output C) long run; raise total demand and output D) short run; decrease total demand and output
Suppose Gina gives up a job paying $30,000 a year so that she can start her own pizza business. She takes $100,000 from her savings account (which paid a 6 percent rate of interest) to pay for equipment, materials and labor, and after one year her total revenue is $70,000 . Gina's profit-related income is
a. $70,000 b. $40,000 c. $34,000 d. $30,000 e. $6,000
In general, productivity levels are much higher in richer countries like the U.S
a. True b. False Indicate whether the statement is true or false
The firm's expansion path records
a. profit-maximizing output choices for every possible price. b. cost-minimizing input choices for all possible output levels for when input prices expand along with production. c. cost-minimizing input choices for all possible output levels for a fixed set of input prices. d. cost-minimizing input choices for profit-maximizing output levels.