If MUa/Pa is greater than MUb/Pb, and the consumer is consuming both goods, the consumer is not maximizing utility. True or false. Explain
What will be an ideal response?
True, when the consumer has maximized utility, the marginal utility per dollar spent on each good purchased will be equal, and the consumer will be on her budget line. In this case, the consumer should consume more a and less b.
You might also like to view...
GDP in a country grew from $10 billion to $14 billion over the span of 5 years. The percentage change in GDP was
A) 4%. B) 7%. C) 10%. D) 40%.
A sudden decrease in the U.S. price level
A) makes creditors in dollars better off. B) makes creditors in dollars worse off. C) do not affect creditors in dollars. D) makes creditors in DM better off. E) makes those with dollar debts better off.
Suppose that IS and LM intersect at full-employment output. A leftward shift of LM will be followed by a __________ price level that shifts LM to the __________ in a return to full employment
A) rising; right B) rising; left C) falling; right D) falling; left
Which movement between two points represents economic growth?
A. J to K
B. K to L
C. L to M
D. M to N