John is going to spend all of his income. For the last unit of Good X consumed John gets 20 utils and for the last unit of Good Y consumed he gets 10 utils. The price of Good X is $4. The price of Good Y is $1. If John wants to maximize his utility he
should
A) continue to purchase the same amount of Good X and Good Y.
B) increase the consumption of Good X and decrease the consumption of Good Y.
C) decrease the consumption of Good X and increase the consumption of Good Y.
D) decrease the consumption of Good X and decrease the consumption of Good Y.
Answer: C
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The burden a tax places on buyers versus sellers is:
A. independent of which side is charged the tax. B. always split in half. C. never shared. D. depends on which side is charged with the tax.
As long as the marginal utilities per dollar obtained from the last unit of all products consumed are the same, _____
a. the consumer is in equilibrium and will not reallocate income b. the consumer is not in equilibrium and will reallocate income c. the consumer is most likely operating a budget deficit d. the consumer is not maximizing utility e. the government will recognize this as an intolerable disequilibrium and will most likely intervene by imposing a tax and reallocate the consumer's income
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