A consumer will maximize utility, given income and prices, when the marginal rate of substitution is equal to the ratio of the prices of the two goods
Indicate whether the statement is true or false
TRUE
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Which of the following statements is the MOST accurate?
A) If PPP holds true, then the law of one price holds true for every commodity as long as the reference baskets used to reckon different countries' price levels are the same. B) If the law of one price holds true for every commodity, PPP must hold automatically. C) If the law of one price holds true for every commodity, PPP must automatically hold as long as the reference baskets used to reckon different countries' price levels are the same. D) If the law of one price does not hold true for every commodity, PPP cannot be true as long as the reference baskets used to reckon different countries' price levels are the same. E) If PPP holds true, then the law of one price must hold true automatically.
During a period of economic expansion, when expected profitability is high,
A) the demand curve for bonds shifts to the left. B) the supply curve of bonds shifts to the right. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises.
Which of the following is NOT true of an oligopoly?
A) They advertise their product. B) The firms recognize their interdependence. C) A few firm account for a large portion of the total output. D) Firms are price takers.
The graph shown best represents:
A. a binding price ceiling.
B. a binding price floor.
C. a missing market.
D. a market for an inferior good.