The price of gasoline is $3.30 per gallon. If one gallon of gasoline provides the same marginal utility as a gallon of milk, how much will the gallon of milk cost at consumer equilibrium?
a. $1.00
b. $1.65
c. $3.30
d. $6.60
c. $3.30
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If you have private information that you are a safer driver than your record indicates, you are likely to buy an insurance policy with
A) a higher than average deductible. B) a positive but lower than average deductible. C) an average deductible. D) no deductible.
The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG, where QD is the quantity of widgets demanded, y is the per capita income and pG is the price of Gizmos. An increase in per capita income will cause
A) demand shifts left. B) demand shifts right. C) demand increases. D) movement along the demand curve.
Some economists believe that deficit spending can impose a burden on future generations. Which of the following does NOT explain the burden?
A) Investment will be crowded out by an increase in current consumption. B) Deficit spending that is allocated to purchases leads to long-term increases in real GDP. C) Future generations will have a smaller capital stock that will reduce their wealth. D) Future generations will have to be taxed at a higher rate.
Starting from an initial long-run equilibrium, under the adaptive expectations hypothesis, a shift to a more expansionary policy will increase
a. prices and unemployment in the long run. b. real output in the short run but not in the long run. c. real output in the long run but not in the short run. d. real output in both the long run and the short run.