Suppose Paul has chosen a combination of two goods, A and B, such that the marginal utility per dollar spent for good A (MUA/PA) is .6 and the marginal utility per dollar spent for good B (MUB/PB) is 1. To increase utility with the same amount of money, Paul should:
A. increase the number of B consumed and decrease the number of A consumed.
B. increase the number of both A and B consumed.
C. increase the number of A consumed and decrease the number of B consumed.
D. do nothing; he cannot increase total utility.
Answer: A
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A) inflation rate; employment rate; seasonal B) inflation rate; unemployment rate; cyclical C) inflation rate; unemployment rate; structural D) nominal interest rate; real interest rate; frictional E) nominal interest rate; unemployment rate; cyclical
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A) increase the opportunity cost of building new single-family homes. B) reduce the demand for condominiums. C) increase the demand for condominiums. D) do none of the above.
If a manager is unsure what the entire profit function looks like, then she can
A) decrease output slightly to see if profits increase. B) increase output slightly to see if profits increase. C) Both A and B. D) None of the above.
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