Eric is maximizing his total utility with choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12 . The price of clothes is $20 . What must be the price of food?
a. $12
b. $6
c. $4
d. $1
e. $0
C
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The rule for the optimal use of any input says that
A. when MRP is less than price, it pays to expand resource use. B. when MRP is greater than price, it pays to expand resource use. C. when MRP equals price, resource use should be cut back. D. resources should be used only if MRP exceeds price.
All food bought in the United States has an ingredient list on the packaging. This is an example of:
A. screening. B. signaling. C. requiring the more informed party to reveal missing information. D. building a reputation.
________ is the ability to produce more of a good or service than competitors when using the same amount of resources
A) Absolute advantage B) Comparative advantage C) Trade superiority D) Trade autarky
If monetary policymakers are more concerned about output fluctuations than inflation fluctuations:
A. they will choose a relatively steep monetary policy reaction curve in which movements in the real interest rates are small. B. they will choose a relatively flat monetary policy reaction curve in which movements in the real interest rates are small. C. they will choose a relatively flat monetary policy reaction curve in which movements in the real interest rates are large. D. they will choose a relatively steep monetary policy reaction curve in which movements in the real interest rates are large.