During a study session for an economics exam with three other students, Peter Daltry commented on an example of a consumer who had to decide on number of slices of pizza and cups of Coca-Cola he would consume. Peter explained that "To maximize his
utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct?
A) Peter described one of the conditions necessary for utility maximization. The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola.
B) Peter's statement is correct.
C) Peter's statement is correct but we must also assume that the consumer is rational.
D) Peter describes one of the conditions necessary for utility maximization. The second condition is that total spending on both goods must equal the amount available to be spent.
Answer: D
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The essential difference between paper money and coins as forms of money is that
A) paper money serves as a unit of account while coins do not. B) the metallic content of coins makes them more acceptable as money. C) paper is paper and not metal. The metal is more durable. D) paper money issued by the Federal Reserve Board is backed by gold while coins are not.
An increase in the US demand for British pounds causes
a. An appreciation of the pound b. Depreciation of the dollar c. None of the above d. Both a and b
Amos is a baker in Tucson. Which of the following statements is correct?
a. The wage needed to keep Amos in the bakery industry in Tucson in the long run is lower than the wage needed to keep him in the industry in the short run. b. The costs of entering the bakery industry in Tucson are sunk costs and therefore those costs shouldn't be a consideration in Amos's decision to stay in the industry. c. The wage needed to keep Amos in the bakery industry in Tucson in the short run is lower than the wage needed to keep him in the industry in the long run. d. The wage needed to keep Amos in the bakery industry in Tucson in the long run is not important -- only the short-run wages are relevant. e. The costs of entering the bakery industry in Tucson are sunk costs and therefore those costs should be considered in Amos's decision to stay in the industry.
Which of the following are not financial intermediaries?
a. banks b. mortgage companies c. finance companies d. check cashing companies