Sanjay is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and MUy/Py = 14. To maximize utility, he should consume
A. the same amount of X and Y since he is already maximizing utility.
B. more X and less Y.
C. less of both X and Y.
D. less X and more Y.
Answer: D
You might also like to view...
If marginal revenue is less than marginal cost, the firm should
A) raise price. B) raise marginal revenue. C) increase its rate of output. D) decrease its rate of output.
Which of the following is an example of transitory income?
a. John's $30,000 per year salary as a junior high school science teacher b. Linda's $40,000 per month income from bond market investments c. Paul's $15 per week earnings from selling aluminum cans he collects from along the side of the road d. Ringo's $100 prize for winning a radio talk-show contest e. George's $6,000 per year earnings in his second job, moonlighting as a clerk in a video rental store
When a variable is top coded, its value is known only up to a certain threshold.
Answer the following statement true (T) or false (F)
Which of the following is NOT a characteristic of a typical indifference curve?
A. The curve shows all combinations of goods that give the consumer the same level of utility. B. The curve will shift out if income increases. C. As a consumer has less of a good, he is less willing to exchange less of it for one more unit of another good. D. The marginal rate of substitution is measured by the slope of the tangent to the curve.