Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 4 and MUy/Py = 4. To maximize utility, he should consume
A. the same amount of X and Y since he is already maximizing utility.
B. less X and more Y.
C. less of both X and Y.
D. more X and less Y.
Answer: A
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An excise tax is a tax on a specific good, like gasoline
a. True b. False Indicate whether the statement is true or false
Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?
A. An advancement in technology. B. A decrease in the level of unemployment towards the normal level. C. An increase in the quantity of labor available. D. A decrease in the amount of capital available.
Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good.
A. $200 for 3 units B. $200 for 1 unit C. $160 for 5 units D. $300 for 1 unit
Suppose that video game discs are a normal good. If the income of video game players increases, you predict that in the market for video games,
A. equilibrium price will increase, and quantity will decrease. B. both equilibrium price and quantity will fall. C. both equilibrium price and quantity will increase. D. equilibrium price will fall, but quantity will increase.