Assume the graph shown represents Dawn's budget constraint. If Dawn's income to spend on these two items increased and Dawn spends all her income on these two goods, then Dawn's total utility from consuming these two goods:
A. will likely go up, since she can afford more of both goods now.
B. will likely go down, since her marginal utility of additional items decreases the more she consumes.
C. will likely go up, since her marginal utility of additional items increases the more she consumes.
D. will likely go down, since she is probably sick of these two things already.
Answer: A
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a. to compare time-adjusted benefits to zero b. to compare time-adjusted costs to unity c. to determine if PVB and PVC are inversely related d. to determine if an option is feasible
When the government runs a deficit, which of the following is true?
A) G > T + TR B) T < G + TR C) T > TR - G D) G > TR - T
Economies of scale exist as a firm increases its size in the long run because of all of the following except
A) as a larger input buyer, the firm can purchase inputs at a lower per unit cost. B) as a firm expands its production, its profit margin per-unit of output increases. C) the firm can afford more sophisticated technology in production. D) labor and management can specialize even further in their tasks.
Lewis has preferences given by the Cobb-Douglas utility function U(q1,q2 ) = q1aq21-a, where a > 0. Show that Lewis's total amount spent on each good, does not change with the prices
What will be an ideal response?