A utility maximizing person has a utility function such that their marginal rate of substitution equals the amount of good Y they consume divided by the amount of good X that they consume (i.e. MRS = Y/X). If the prices of goods X and Y are the same, then the person will
a. consume more X than Y.
b. consume more Y than X.
c. consume equal amounts of X and Y.
d. we must know the person’s income before coming to a conclusion.
c. consume equal amounts of X and Y.
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In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 3 percent, then the output gap equals:
A. ?2 percent. B. 1 percent. C. ?1 percent. D. 2 percent.
When an individual firm in a competitive market decreases its production, it is likely that the market price will rise
a. True b. False Indicate whether the statement is true or false
What are the major assets and the major claims (liabilities) on a commercial bank’s balance sheet?
What will be an ideal response?
An economy characterized by high unemployment is likely to be
A. having a recessionary expenditure gap. B. having an inflationary expenditure gap. C. experiencing hyperinflation. D. experiencing a high rate of economic growth.