A consumer is maximizing utility when
A. the consumer has spent all of his income.
B. the slope of the budget constraint has reached -1.
C. diminishing marginal utility has set in.
D. the slope of the budget constraint equals the marginal rate of substitution.
Answer: D
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If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point
A) within its PPF. B) on its PPF. C) beyond its PPF. D) None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible.
The Bureau of Labor Statistics would categorize a retiree who is not working as
A) unemployed. B) a discouraged worker. C) out of the labor force. D) employed.
When demand is elastic: a. price elasticity of demand is greater than one
b. consumers are relatively responsive to changes in price. c. the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. d. all of the above are correct.
The classical school of thought believed that ______.
a. Say’s law was incorrect b. Keynes’s macroeconomic model was correct c. an economy can experience prolonged unemployment d. wages and prices adjust quickly to changes in supply and demand