When Bo increases the consumption of Good X and decrease the consumption of Good Y, her marginal utility of
A) X falls and the marginal utility of Y will increase.
B) both X and Y will decrease.
C) X increases and the marginal utility of Y will fall.
D) both X and Y will increase.
Answer: A
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The price elasticity of demand for cigarettes is 0.4. If government wants to reduce smoking by 10 percent, by how much should it raise the price of cigarettes by imposing a tax?
A) by 10 percent B) by 20 percent C) by 25 percent D) by 50 percent
The figure above shows a consumer is indifferent between points
A) d and c. B) a, b, c, d, and e. C) e and d. D) b and a.
Technological progress leads to which of the following?
(A) An increase in efficiency. (B) Lower savings rates. (C) A decrease in efficiency. (D) A loss of interest in human capital.
Which of the following statements is correct?
A. Total utility is the change in marginal utility as quantity consumed increases. B. Marginal utility is the sum of total utility. C. Total utility is the product of multiplying price times marginal utility. D. Total utility is the sum of marginal utilities.