Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50¢ per loaf, and wine costs $6 per bottle. In this situation, the consumer:
a. could increase utility by buying more bread and less wine.
b. could increase utility by purchasing more wine and less bread.
c. has maximized utility and attained consumer equilibrium.
d. is violating the law of diminishing marginal utility.
a
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Which of the following nations can be called a mixed economy?
A. The United States. B. Italy. C. Sweden. D. France. E. All of these nations are mixed economies.
The Federal Reserve issues a report indicating that future inflation will be higher than had previously seemed likely. As a result
A) the supply curve for bonds shifts to the right. B) the demand curve for loanable funds shifts to the left. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises.
Which of the following will make price discrimination difficult for a monopolist?
A) the possibility of resale of the product B) a constant marginal cost curve C) an increasing marginal cost D) a downward sloping demand curve
What does elasticity of demand measure?
a. how responsive consumers are to advertising b. how responsive consumers are to price changes c. how much consumers are affected by layoffs d. how much consumers are affected by inflation