Mr. Smith is consuming beer and wine. At his current level of consumption, the marginal utility per dollar is 30 units for beer and 20 units for wine. Mr. Smith should
A) consume twice as much beer as wine.
B) consume twice as much wine as beer.
C) increase his consumption of beer relative to wine.
D) increase his consumption of wine relative to beer.
Answer: C
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"Captured" regulators end up doing exactly what the regulated industry wants
a. True b. False
Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:
a. shift to the left as consumers switch from buying discs to cassettes. b. shift to the right as consumers switch from buying discs to cassettes. c. shift to the left as producers increase cassette production and reduce disc production. d. remain unchanged since discs and cassettes are sold in separate markets.
If expected inflation were 4%, and the real interest rate was 5%, what sector would be worse off if the actual inflation rate turned out to be 3%
a. Lenders. b. Borrowers. c. Both. d. None.
In general, when the quantities of a complementary resource are increased, the productivity of the other resources
A. rise. B. fall. C. remain the same.