?Suppose Sally allocates her budget between two goods, A and B. She spends her entire income on a combination of A and B, for which the ratio of marginal utility of good A to its price exceeds the ratio of marginal utility of good B to its price. She can increase her total utility by buying:
a. ?more B and less A.
b. ?more A and less B.
c. ?more B and more A.
d. ?less B without changing her consumption of A.
e. ?more A without changing her consumption of B.
Answer: b. ?more A and less B.
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Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save. Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50
The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20. Marv has only $50 to spend, but has not yet paid for his groceries. How can Marv increase his total utility without spending more than $50? A) Marv should buy fewer boxes of cereal and fewer bottles of soft drink. He can then spend more on other items. B) Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices. C) Marv should buy more boxes of cereal and fewer bottles of soft drink. D) Marv should buy fewer boxes of cereal and more bottles of soft drink.
A major benefit of automatic stabilizers is that they:
a. guarantee a balanced budget over the course of the business cycle. b. have a tendency to reduce the national debt. c. help increase recessionary gaps in the economy. d. moderate the effect of fluctuations in the business cycle. e. require legislative review by Congress before they can be implemented.
A firm that does business all over the world is called a(n)
a. multinational corporation. b. international conglomerate. c. competitive corporation. d. government-owned business.
The opportunity cost of an activity includes the value of:
A. the chosen activity minus the value of the next-best alternative. B. all of the alternatives that must be forgone. C. the least-best alternative that must be foregone. D. the next-best alternative that must be foregone.