Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:
A. is buying too much pizza and not enough soda.
B. should purchase more pizza and less soda.
C. has maximized his or her total utility.
D. needs to equate the marginal utilities for pizza and soda.
Answer: C
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In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B. B) the new short-run equilibrium will be at point D. C) the new long-run equilibrium will be at point B. D) real Gross Domestic Product (GDP) per year will fall below Y1.
In the simple Keynesian model which has no taxes and a saving function which is in the form S = -80 + .20Y, a $200 increase in desired investment leads to an increase in equilibrium income of
A) $40. B) $100. C) $400. D) $1000.
Under a "cost-plus" system of hospital reimbursement, hospitals have the incentive to _____
a. minimize expenditures b. purchase the most recent high-tech equipment c. release patients early d. shift away from more expensive surgeries
Total cost is:
A. the sum of fixed cost and average variable cost. B. the sum of variable costs and fixed costs. C. average variable cost times quantity. D. the sum of average fixed cost and marginal cost.