Assume that Alex would like to purchase a combination of product A and product B such that, after he is done spending his limited income, the MUa / Pa = 8 and MUb / Pb = 4. To maximize utility without spending more money, Alex should
A. purchase more of both product A and product B.
B. purchase less of product A and more of product B.
C. purchase more of product A and less of product B.
D. make no change in purchases of products A and B.
Answer: C
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Which of the following might lead a nation to engage in international trade? a. Differences in natural endowments such as climate. b. Differences in skills of the labor force
c. Differences in endowments of natural resources. d. All of the above.
If the banking system has demand deposits of $100,000, total reserves equal to $20,000, and a required reserve ratio of 20 percent, the banking system can increase the volume of loans by
A. $80,000. B. $100,000. C. $20,000. D. $0.
If the price elasticity of demand for chicken is 2, then a 20 percent decrease in the price of chicken will lead to a:
A. 10 percent increase in the quantity demanded of chicken. B. 40 percent increase in the quantity demanded of chicken. C. 10 percent decrease in the quantity demanded of chicken. D. 40 percent decrease in the quantity demanded of chicken.
The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because: